The underlying annual rate of inflation fell by 0.1 points to 1.9%, the Office for National Statistics said.

A cut (in rates) is still unlikely, I think we will only get one if the global picture deteriorates

Ross Walker Royal Bank of Scotland

And the headline rate - which includes mortgage interest payments - also fell by 0.1 points to 1.4%.

The price of clothes and shoes were the main reason for the slide in inflation.

The ONS said that price recoveries after the summer sales were not as widespread as a year earlier.

And prices for household goods rose by less than last year.

This was mainly due to telephone charges, where more people took up discount packages this year.

Consumers hold the key

But there were also price rises. The cost of seasonal food rose in August, compared with a fall last year.

This was largely the result of an increase in the price of potatoes because of poor weather conditions.

The figures were more or less what analysts in the City had been expecting.

And, at 1.9%, inflation has fallen further below the Bank of England's target rate of 2.5%.

But that does not necessarily mean an interest rate cut is on the way.

Ross Walker, an economist at the Royal Bank of Scotland, said there was now no pressure on the Bank of England to change interest rates.

"A cut is still unlikely, I think we will only get one if the global picture deteriorates more than expected, or if domestic consumer demands deteriorate more than expected."

'Prices will stop falling'

Adam Chester, an economist at the Halifax said: "We have continued deflation on the High Street but service sector inflation is running at around 4.5%.

"At some point we would expect goods prices to stop falling and then it would be services prices that would make the running."

He said he thought the figures would be unlikely to make much difference to the Bank of England's thinking on interest rates.