UK prices fell in October to a two-year low, driven by easing gas and electricity inflation, the latest Consumer Price Index data showed.
Last month, inflation fell to a lower-than-expected 4.6% from 6.7% in September, according to the Office for National Statistics.
The largest downward contribution came from housing and household service prices, including the cost of electricity.
Core CPI, which strips out energy, food, alcohol and tobacco, also rose, however, by 5.7% in the 12 months to October, down from 6.1% in September.
Meanwhile, real wages are continuing to rise after data on Tuesday showed that total pay rose 7.9% per year, on average, in July to September.
Why inflation figures matter
Nicholas Hyett, investment analyst at Wealth Club, said the substantial fall in inflation should help ease the cost-of-living crisis, while a pause in interest rate rises will be a huge relief to mortgage holders.
"Downing Street will be particularly pleased to wave goodbye to the UK’s status as the inflation nation, since it means the prime minister's pledge to cut inflation in half is achieved a month ahead of schedule – although whether the government is entitled to celebrate a fall in global energy prices over which it has no control is rather dubious."
However, he said, it is not all champagne and roses.
"Core inflation, which measures domestically generated inflation rather than moves caused by swings in global commodity prices, is falling but still stubbornly high. Some of that is probably down to lingering effects of higher energy and food prices earlier in the year – as it can take time for those pressures to make their way through the system."
Hyett also noted that until core inflation starts to show sustainable falls, we’re not completely out of the woods and central bankers will have their fingers poised over the interest rate trigger.