UK Inflation Holds At 1.8pc

Falling gas and electricity bills have kept inflation below the Government's two per cent target for the third month in a row, according to figures from the Office for National Statistics.

The Consumer Prices Index remained unchanged at 1.8 per cent in September its lowest rate since March 2006 despite rising oil prices and food costs.

The figures offer hopes of a possible interest rate cut in the near future.

Overall prices for milk, cheese and eggs rose six per cent last month, while average costs for butter and margarine increased by 15 per cent as supermarkets hiked prices.

But soaring dairy costs were partially offset by lower vegetable prices.

Oil prices reached record highs during September but this had less impact on inflation than expected.