Consumer prices in the UK tumbled 0.7 per cent in October to a much lower-than-expected annualised rate of 4.5 per cent, after peaking at 5.2 per cent in September.

While prices are still rising faster than the Bank of England’s 2.0 per cent medium-term target, economists said the latest data justified the bank’s dramatic 1.5 percentage point cut in its key rate earlier this month and left scope for still lower rates.

It is the first time the annual rate in the consumer prices index (CPI) - the official measure of the cost of living - has fallen since August 2007. The size of the decline took City economists, who had expected a drop to 4.8%, by surprise and it was the biggest slowdown since 1992, the Office for National Statistics said. Inflation reached a 16-year high of 5.2% in September due to spiralling energy costs, which have since fallen.

Financial Times, The Guardian