Inflation has fallen at the steepest rate in more than a decade, driven down by cheaper fuel and food.

The Consumer Prices Index fell by 0.7 points to 4.5 per cent month-on-month in October - the biggest deceleration since official CPI records began in 1997 and the largest since 1992 using historical data.

The Retail Prices Index slid from five per cent to 4.2 per cent, the steepest decline since 1993.

Lower meat costs and supermarket discounting meant that food and non-alcoholic drinks were responsible for a “large downward contribution” to the CPI.

Transport inflation fell from 7.6 per cent to 4.3 per cent in October.

Falling inflation may help bolster battered consumer confidence, which has been undermined by the rising cost of living.

However, there are also fears that the economy may become locked in a deflationary spiral, making business conditions even worse. Prime Minister Gordon Brown warned of the danger yesterday.

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