LONDON (AP) — Britain's inflation rate slowed to an annual rate of 1.8 percent in June, at last falling below the official target for the first time in 20 months, official data showed yesterday.

It was the lowest level for the consumer price index since September 2007, when it was last below the government two percent target. The CPI rate has fallen every month except one since September's inflation peak of 5.2 percent.

Sliding food prices, particularly for meat, milk and fruit, were the main factor behind the fall in June. A year earlier, food costs were rising sharply, the Office for National Statistics said.

"This is no one-off," said Jonathan Loynes, chief European economist at Capital Economics. Given the recent drop in wholesale food prices and lower import prices, "further falls in food CPI inflation are likely over the coming months," he said.

The Bank of England has forecast that the annual consumer price inflation rate is likely to fall below one percent later this year.

Lower prices seem to have encouraged more consumer spending. In fact, the British Retail Consortium reported that retail sales were up 1.4 percent in June on a comparable basis as warm early summer weather raised demand for summer clothes, outdoor goods and food.

June's increase, the third in six months, more than made up for the 0.8 percent fall recorded in May.

Freddie George, retail analyst at Seymour Pierce, said the June gain was less than robust, considering the weather was more favourable this year. "In addition several of the department stores started their summer sales early in June, and we believe there has been a higher level of discounting to stimulate sales," he comment.