There may be further turmoil ahead for the British economy if inflation continues to fall, which could potentially result in deflation during 2010, according to economists.
Jonathan Loynes, chief European economist at Capital Economics, said: "The downward pressure of the huge amount of spare capacity in the economy should eventually push it down sharply, keeping alive the threat of a period of outright deflation late next year or beyond."
Unemployed Brits may face cuts in benefits or tax thresholds if the rate of inflation continues to fall, and the Trades Union Congress (TUC) has also warned against government spending cuts.
Commenting on the latest inflation figures from the Office for National Statistics (ONS), TUC general secretary Brendan Barber said that the UK economy is "close to a deflationary period".
He added:"Those talking of withdrawing stimulus or spending cuts under these conditions are playing with economic fire."
ONS figures revealed that the rate of consumer price inflation fell to 1.1 per cent in September, down from 1.6 per cent in August.
