Hopes have risen that the UK could avoid a recession after inflation unexpectedly fell last month.

Data released by the Office for National Statistics showed that the consumer prices index hit 9.9 per cent in the year to August, down from 10.1 per cent the month before.

Analysts had forecast that the rate of inflation would remain unchanged.

Nevertheless, the rate that prices are going up remains at levels last seen 40 years ago.

The ONS said a 6.8 per cent drop in petrol prices had led to the fall in inflation last month.

The Bank of England warned a month ago that the UK was heading for recession later this year.

Prime minister Liz Truss has insisted that a recession – classed as two consecutive quarters of negative economic growth – can be avoided.

Chancellor Kwasi Kwarteng is expected to deliver a mini-Budget next week in which he will unveil plans to cut taxes in order to boost economic growth.

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