The biggest ever monthly fall in gas prices since comparable records began in 1988 coincided with the start of energy regulator Ofgem's cap on household bills.
Mike Hardie, head of inflation at the ONS, said: "The fall in inflation is due mainly to cheaper gas, electricity and petrol, partly offset by rising ferry ticket prices and air fares falling more slowly than this time previous year".
As well as the sharp decline in energy prices, Whitehall statisticians said the drop in inflation was also fuelled by lower petrol prices and a decline in the cost of hotel rooms.
This breaking news story is being updated and more details will be published shortly. Year-on-year house price growth is forecast to have slowed to 2.5 per cent in December, down from 2.8 per cent in November.
Tom Adams, head of research at advice site Savings Champion, said: 'Having come tantalisingly close in December, CPI inflation has finally fallen below the Bank of England's two per cent target and is now at its lowest level for two years.
'That said, sadly it is still the case that many savings accounts are paying less than inflation - particularly older accounts and those held with the high street banks.
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Consumer price changes are important for the economy because inflation is a subtraction in the calculation of real GDP growth, so rising price pressures can depress economic growth and vice versa.
"The further falling back in inflation facilitates the Bank of England maintaining a "wait and see" approach on interest rates until after the United Kingdom leaves the EU", Howard Archer, chief economic adviser to the EY ITEM Club consultancy, said.
The Consumer Price Index inflation rate for rural areas stood at 1.29%, while it was 1.50% in December 2018.
Economists said it facilitated the Bank's "wait and see" approach on interest rate hikes ahead of Britain's departure from the EU.
"Our suspicion is that inflation will spike significantly higher if the United Kingdom leaves the European Union without a deal".
India's consumer prices rose at a milder pace than anticipated in January and remained below the Reserve Bank of India's target for a sixth straight month, strengthening views it could again cut the key interest rate at its next policy review in April. A double-digit devaluation of Pound Sterling that increased the cost of imported goods for consumers, and a strong labour market were seen behind the pick up.