UK inflation has fallen for the first time since September 2004, Office for National Statistics (ONS) figures show.
Inflation measured by the Consumer Prices Index (CPI) dipped to 2.3% in October from 2.5% a month earlier.
The drop was slightly bigger than had been forecast by experts and could improve the prospects of a rate cut.
The underlying rate of retail price inflation fell to 2.4% from 2.5%, while the headline rate - which includes mortgages - fell to 2.5% from 2.7%.
The fall in CPI inflation moves the figure closer to the government target of 2%.
The ONS said a fall in banking charges had the largest downward effect on CPI inflation, while a fall in fuel prices also helped as the cost of a barrel of crude oil fell from record highs.
It also said that food costs had fallen as a result of increasing supplies of some fresh vegetables such as onions, cauliflowers and tomatoes.
"The figures are better than expected and although petrol prices have come down, there is an improvement in core rate of inflation," said Philip Shaw, chief economist at Investec said.
With petrol prices falling, experts predict inflation will continue to ease
"What this suggests is that we may have already seen the peak of headline inflation."
The CPI data comes a day after the ONS reported an unexpected fall in factory gate prices, which analysts also saw as helpful for a rate cut.
But any adjustment in the cost of borrowing is not expected until next year.
"While it is clearly premature to sound the all-clear on inflation, the October consumer prices data are largely reassuring for the Bank of England and boost hopes that inflation has peaked," said Howard Archer of Global Insight.
"We believe the door is opening for an interest rate cut early in 2006 if the economy fails to show sustained significant signs of improvement over the next couple of months."
Analysts are now waiting for the Bank of England's key quarterly inflation report, due out on Wednesday, for clues as to the Bank's moves in coming months.