Inflation fell to 4.6 per cent in October, down from 6.7 per cent in September, largely due to the plummeting price of energy, the Office for National Statistics said.
The fall, to just below forecasts for a reading of 4.8 per cent, means the government has now achieved its pledge to half inflation by the end of the year. The figure stood at 10.1 per cent in January.
Prime Minister Rishi Sunak said: "In January I made halving inflation this year my top priority. I did that because it is, without a doubt, the best way to ease the cost of living and give families financial security.
"Today, we have delivered on that pledge."
The goal was one of five priorities cited by the Prime Minister, with the others being to grow the economy, reduce government debt, cut NHS waiting lists, and stop small boats carrying migrants across the English Channel.
Chancellor Jeremy Hunt, who is due to deliver an update on the government's budget on November 22, said the data shows the government was winning its battle against inflation and should now turn to its plans for generating "long-term economic growth".
Grant Fitzner, chief economist at the Office for National Statistics (ONS), said the fall in inflation was "largely expected".
"This time last year we were facing very large increases in gas and electricity bills, despite the new subsidies that were introduced at the time," he told BBC Radio 4 on Wednesday.
"In the latest month, numbers were down substantially, although it's worth mentioning that energy prices are not back to their pre-Russian-invasion levels. They're still elevated compared to what they were but have come off quite a bit."
He said food prices were little changed on the month, after rising this time last year, while hotel prices fell, both helping to push inflation to its lowest rate for two years.
Alice Haine, personal finance analyst at Bestinvest, the DIY investment platform and coaching service, said the new data shows "the battle against high prices is finally gaining ground".
She added: "The comfort factor for households was amplified by the latest drop in core inflation, a figure the Bank of England tracks carefully to monitor underlying price pressures.
"Core CPI, which strips out the more volatile items such as food and energy, eased to 5.7 per cent from 6.1 per cent in September, with the latest fall helping to cement the view that interest rates may have peaked with no more rate rises to come any time soon."
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said while the Prime Minister has achieved his target to halve inflation this year, "this owes more to the downward pressure on prices from falling energy costs and rising interest rates than any government action".
Sterling eased in the wake of the release of the data, reinforcing expectations that the Bank of England will be cutting interest rates by the middle of next year.
Sterling was down 0.2 per cent on the day at $1.247 by 7.24am before the data was announced.
Data released earlier this week by ONS showed that real pay in the UK is growing at the fastest rate in about two years, as earnings outstrip inflation.
"People are finally feeling the benefit in their pay packets and with inflation expected to have cooled significantly last month it is an indication that the worst of the cost-of-living squeeze might be over," said Danni Hewson, head of financial analysis at investment platform AJ Bell.
However, "if households are feeling more confident and have a bit more room in the budget they are likely to spend that cash, which could prove inflationary".