The underlying level of UK inflation has fallen to its lowest level since records began in 1975, official figures have shown.

The underlying rate of inflation, which excludes mortgage payments, fell by 0.3 percentage points to 1.5% in June, the Office for National Statistics (ONS) said.

UK underlying inflation

Jan: 2.6% Feb: 2.2% Mar: 2.3% Apr: 2.3% May: 1.8% June: 1.5%

The drop, the first month-on-month fall since November last year, and compared with economists' forecasts of a drop of just 0.1 percentage points.

The headline rate of inflation, which includes mortgage interest payments, fell by 0.1 percentage points to 1.0%, the ONS said.

Interest rates

The fall lowered expectations that the Bank of England's monetary policy committee would raise interest rates at its next monthly meeting, in August.

A rate rise has been seen as imminent, to counter strong housing markets and retail spending.

But George Buckley, at Deutsche Bank, said: "You can all but rule out a rate move in August. These are very good numbers."

Indeed, the fall placed the Bank within a whisper of being forced to write to Chancellor of the Exchequer Gordon Brown to explain why inflation was so low.

The chancellor has set the Bank a 2.5% inflation target, with the Bank obliged to explain if inflation deviates more than 1 percentage point above or below the target.

Bank of England governor Eddie George was "quite lucky" he had not been forced to issue an explanation, Mr Buckley added.

Reversal to come?

But analysts believe the June figure represents the end of the current series of inflation drops.

The ONS said last month's fall reflected lower prices for petrol, clothing and footwear and seasonal food.

Prices in these goods can be volatile.