As expected, inflation figures officially dropped in October thanks to falling oil, transport and food costs.

The Consumer Prices Index (CPI) measure, which hit 5.2% in September, dropped to 4.5% - the biggest month-to-month drop in 16 years.

The Retail Prices Index, (RPI) the alternative measure of inflation, which includes housing costs, fell from 5% to 4.2%, the biggest fall since 2003.

The RPI figure is usually the figure which is referred to as the "headline" rate of inflation, as it is often used for agreeing pay settlements and is also used when calculating changes in benefits or pensions. The interest charged on student loans is also based on RPI figures.

"The largest downward pressure on the CPI annual rate came from transport costs where the price of fuels and lubricants fell this year but rose last year," said the Office of National Statistics.

"The decrease this year was triggered by a sharp fall in the price of crude oil."

Falling prices for food and non-alcoholic beverages, with meat prices being cut by supermarkets, also contributed to the drop.

Further drops in the coming months are expected, with fears that inflation will drop below the 2% target and inflation may even turn negative at the end of the year.

Prolonged periods of negative inflation, or deflation, would have serious implications for the economy, as consumers postpone new purchases in the hope that they will become cheaper later on.

That can ultimately lead to further falls in demand and output, prompting firms to respond by cutting jobs or cutting wages.