Plunging fuel and food costs left the core measure of inflation at a 12-year low last month, official figures have shown.
The Office for National Statistics (ONS) calculated the consumer prices index (CPI) at an annual rate of 1% in November - showing costs were rising at a weaker pace than wages overall as the Christmas shopping season got under way.
The ONS credited a 5.9% fall in fuel prices compared to November 2013 and a 1.7% drop in food costs over the same period as supermarkets battled for market share amid the continuing price war.
In addition to the lower grocery costs, it has been supermarkets which have led the way in cuts to fuel costs, with both unleaded and diesel falling by 3p-per-litre in November alone as the chains use cheaper fuel prices to bolster their wider offering.
Separate industry figures, released by Kantar WorldPanel, suggested cheaper groceries had meant savings for shoppers of £182m over the past 12 weeks.
Chancellor George Osborne hailed the low inflation rate as "good news".
"We've got low inflation, rising pay cheques and we've got economic growth at a time when the world economy is increasingly unstable," he said.
November's inflation figure marked a surprise easing in the rate, given that economists were expecting a flat picture after CPI was measured at 1.3% in October.
But the strength of sterling in recent months, combined with dramatic declines in oil prices, have also helped push down inflation by cutting import costs.
The ONS said computer game costs contributed to the decline in the inflation rate, too.
It means Bank of England governor Mark Carney only just avoids having to write to the Chancellor George Osborne to explain why inflation is more than 1% off the bank's 2% target.
Mr Carney has already acknowledged that he is likely to have to write to Mr Osborne in the coming months as oil costs continue to decline.
CPI has not been as low since September 2002 and was last lower in June 2002.
The fall in inflation adds to hopes of a rise in real-terms wages which have lagged behind the increasing cost of living for six years.
Additional figures from the ONS, due on Wednesday, are tipped to show wages growing at an annual rate of 1.5% - suggesting that the squeeze on earnings is easing in the short term.
However, there are fears that an inflation rate below 1% could move the UK uncomfortably closer to the scenario playing out in the eurozone where there are concerns about a damaging deflationary spiral.
Mr Carney warned that the falling oil price might present some risks to financial stability.
"Geopolitical risks could intensify. Inflation expectations could be further depressed in economies, such as the euro area, where core inflation is
already weak, slowing nominal income growth and increasing the burdens of debts," he said.
