The UK rate of inflation slowed to 1.6 per cent in July, beyond market expectations and well below the Bank of England’s target rate of two per cent.

According to government number crunchers, consumer prices dropped from 1.9 per cent in June, although they remain well above wage increases which grew by just 0.6 per cent in the three months to June.

Falling prices in clothing, footwear, food and non-alcoholic drinks helped to put a brake on inflation, according to the Office for National Statistics (ONS).

Separate data from ONS showed that the average house price in England and Wales slumped 2.9 per cent in August compared with July, while house prices in London fell 5.9 per cent during the same period, the fastest drop for a single month on record.

Analysts at Rightmove said the changes were due people becoming more aware of personal finance and the cost of mortgages finally starting to increase.