Inflation in the UK fell sharply to 0.5% in December.
The drop was triggered largely by lower fuel prices. At the same time, the price hikes in December 2013 on gas and electricity fell out of the equation.
Analysts believe inflation in the UK could drop yet more in future as is happening in the eurozone where fears swirl around the problems brought by deflation. Lower inflation is believed to be likely if oil prices continue to drop.
Chancellor George Osborne said the lower rate is good news.
He tweeted: "Inflation is 0.5% - lowest level in modern times. Welcome news with family budgets going further & economic recovery starting to be widely felt."
Lower inflation was "like a giant giant tax cut for the economy,” said Danny Alexander, Liberal Democrat chief secretary to the Treasury.
Observers say that with inflation dropping, an increase in interest rates is not likely in the near future, despite house prices continuing to rise, according to the ONS.
Data published on Tuesday showed that prices in the year to November rose 10%, with "strong" growth across most the UK.
The ONS said property values rose 0.2% between October and November, making the average house price £271,000, just shy of the all-time high of £274,000 seen last August.
