CPI annual inflation was 1.1 per cent in September, down from 1.6 per cent in August, figures from the Office for National Statistics show.
The ONS says that by far the largest downward pressure affecting the change in the CPI annual rate came from housing and household services as gas and electricity bills stayed neutral after a rise this time last year. Petrol and cars was the largest upward pressure on the change as second-hand car sales rose.
The Retail Price Index, which includes mortgage interest repayments, fell to -1.4 per cent, to compared with -1.3 per cent in August.
Although the CPI has fallen, the ONS says the UK inflation rate in August, at 1.6 per cent, was above the provisional figure for the European Union as a whole of 0.6 per cent.
Black Swan Capital Wealth Management chief economist James Hughes says inflation will be low to zero for the next two years, until the global economy recovers.
He says: “Ordinarily, when governments print money, sell bonds and nationalise banks the eventual outcome is inflation.
“However, the UK’s problems, comprising a massive budget deficit, ageing population, unsustainable welfare system and uncompetitive exchange rate, are so deep and fundamental that the increased money supply is not yet feeding through to prices, and may not do so for some time.”