The analysis, published in the Central Bank's staff blog, comes as the latest Annual Report from the Royal Mint shows that production of 1 and 2 pence coins was roughly halved in 2016-17 compared to the previous year. Production of pennies fell from around 500 million, to just 288 million.

Earlier this year, the Spring Statement and a call for evidence on cash and digital payments from HMT reignited a discussion about the retirement of low denomination coins, specifically the 1 and 2 pence pieces. The HMT consultation document highlights that six out of every ten 1p and 2p coins are used just once before they drop out of circulation - into jars, down the back of the sofa or just lost to the ether.

The report's authors state: "What is more, as inflation slowly erodes the purchasing power of the penny, the balance between its usefulness and its cost begins to shift."

Their findings suggest that abolition of the coinage would have no significant impact on prices because rounding would most likely be applied at the total bill level, not on individual items and it would only affect cash transactions, which make up just three percent of spending by value. Furthermore, low value payments, where cash has always been king, have been encroached on in recent years by the adoption of new technologies such as contactless cards.

"Even if individual prices were rounded on all payments, analysis of UK price data suggests no economically significant impact on inflation," states the report. When rounding is applied to the final bill, as is the case in most other markets that have removed low denomination coins, "research shows that just three items may be enough to remove any inflationary bias in rounding, even if the underlying items have a bias towards ending in .99."