The Retail Prices Index (RPI) fell to -1.6 per cent in June, its lowest since it began in 1948.

Figures published today by the Office for National Statistics reveal that annual inflation measured by the RPI - which includes housing costs such as mortgage interest payments and council tax - was -1.6 per cent, compared with -1.1 per cent in May.

It also revealed that the Consumer Prices Index (CPI) – which is used by the government as the official measure of annual inflation – fell to 1.8 per cent in June, down from 2.2 per cent in May.

This first time it has fallen below the Government's two per cent target since September 2007.

The largest downward pressure on the CPI came from food and non-alcoholic drink prices, which fell between May and June this year but increased over the same period last year.

Within the category, the downward pressure came from meat, bread and cereals, fruit, vegetables and milk, and cheese and eggs. There was also a smaller downward effect from sugar, jam and confectionery.

A significant downward effect also came from furniture prices, which rose by less than last year.

There was one large upward pressure on the CPI which came from the recreation and culture category, where the price of computer games rose by more than a year ago.