The speed at which prices have been rising in the UK slowed to the lowest rate on record of just 0.3% in the year to January 2015, providing a boost to the nation's savers.
This means that a basket of goods and services that cost £100 in January 2014, when the inflation rate was 1.9%, would have cost £100.30 in January 2015.
Falling petrol and food prices were the reasons for the slowdown, said the Office for National Statistics, which compiles the Consumer Prices Index measure of inflation.
The average petrol price fell by 8.5p a litre between December 2014 and January 2015 to 108.3p and the average diesel price by 7.3p to 115.6p. Petrol is now at its lowest price since November 2009 and diesel since February 2010, the ONS added.
The price of food and non-alcoholic drinks, meanwhile, fell by 0.7% during the period. The most notable price reductions were for two-pint cartons of milk and a range of fruits.
Boost to consumer spending
Adrian Lowcock, head of investing at AXA Wealth, said: "Falls in petrol and food prices should be viewed positively as it gives a boost to consumer spending in coming months as real disposable incomes rise."
Falling inflation rate is reasonably good news for savers too as it means there are now 558 savings accounts that will beat inflation after tax, according to Moneyfacts – up from 510 accounts last month. However, Sylvia Waycot, editor of Moneyfacts.co.uk, warned that the long-term effects of inflation mean savers' cash does not go as far as it used to.
"After tax and inflation, the average interest paid on easy access savings accounts isn't even enough to buy you one sausage a week. The average interest paid on easy access accounts is just 0.66%, while across the Isa range it's still miserable at 1.44%, even less than last year when it was 1.65%.
"Inflation has hit a new low, and although this helps today's savings interest go further, it still won't get you a sausage."
Apart from two upticks in April and June 2014, inflation has been slowing continuously every month since June 2013 – when it exceeded the Bank of England's 2% target by nine percentage points.
Last week, the Bank of England governor Mark Careny said inflation could turn negative (a situation of deflation) temporarily in the spring as a result of falling global oil prices. Deflation occurs when aggregate price levels fall instead of rise.
While that may sound like a good thing, it isn't. Falling prices can put people, businesses and governments off spending money as they hold out for even lower prices. This in turn can lead to a lack of economic activity and then to more unemployment.
And while inflation can be controlled in part by raising interest rates, it's much trickier to get a firm grip on deflation because there's a limit as to how much interest rates can be cut.
The Bank of England base rate is already at a historic low of 0.5%, but Carney has said if low inflation persists then the Bank will consider further cuts.
With CPI inflation now at 0.3%, a basic-rate taxpayer getting taxed on their earnings at 20% needs a savings account paying 0.38% a year to beat inflation.