UK inflation has slowed to 3.1% from 3.2% in June, according to the Office for National Statistics (ONS).

This is the third month in a row that prices increases have eased. However, the Consumer Price Index (CPI) is still well above the Bank of England's 2% target rate.

The Retail Prices Index (RPI) slowed to 4.8% from 5% in June,

The ONS said that the main factors behind the drop in the inflation rate were the price of clothing and footwear, which fell by 4.9%.

The Bank of England warned last week that the impact of the emergency Budget's VAT rise to 20%, aimed at cutting the massive deficit, will also keep inflation above the target next year.