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The increase is the equivalent of an extra 79p on the average household council tax bill.
Although the rise is the lowest for a decade, it is still higher than the rate of inflation.
Margaret Eaton, Chair of the Local Government Association, said councils had revised their tax rises down in reponse to the growing financial burden on ratepayers as a result of the economic downturn.
"Councils understand people are suffering and they are working flat out to keep council tax down, to keep local businesses afloat and help people deal with the impact of the recession," she commented.
It has also been revealed that local council in England will be made to reveal how much money their chief executives are paid under proposed legislation.
