An unexpected dip in inflation last month has raised hopes that interest rates in the UK could have peaked, although experts say that it is still too early for homeowners to put the champagne on ice.

The Consumer Price Index, the government’s preferred measure, fell to 1.9 per cent in July, a sharp drop from June’s level of 2.4 per cent and well below analysts’ forecasts of 2.3 per cent. This is the first time that inflation has tumbled below the Bank of England's 2 per cent target in more than a year, sparking speculation that another rate hike won’t be needed.

Falling prices are not good news for everyone, though. Investors with inflation-linked savings will get less for their money if price increases slow. It could also mean smaller amounts for pensioners and people claiming other state benefits.

Here is what it could mean for you:

Homeowners – The Bank of England signalled in its quarterly inflation forecasts that another hike to 6 per cent may be needed to bring inflation back to target, but that was before they had seen July’s inflation figures.

Ian Kernohan, economist at Royal London Asset Management, said: “The fact that index has come in well below expectations must put some question mark over a move to 6 per cent interest rates.”

An end to rate increases will be welcomed by those with variable mortgages, who have seen their monthly repayments soar over the past year.

A homeowner with a £200,000 interest-only loan on a variable rate is already paying an extra £208 a month, or £2,496 a year, as a result of the one and a quarter point increase in rates since August last year.

Unfortunately, some experts believe one more rate rise may still be necessary.

Howard Archer at Global Insight, a consultancy, said: “It is likely that inflation in July was brought down by some summer sales starting early, while recently elevated oil prices and possible future rises in food prices as a result of the bad weather could exert upward pressure on inflation over the next few months. We suspect the Bank of England will now sit tight until at least November while it monitors underlying inflation developments.”

Homeowners would pay an extra £42 a month, or £500 a year, if Bank rate went up another quarter of a percentage point.

Savings – If the drop in inflation is sustained investors with inflation-linked savings will earn less. National Savings index-linked savings certificates are based on the Retail Price Inflation (RPI), which fell to 3.8 per cent in July from 4.4 per cent.

Pensioners – Falling prices, especially for essentials like food, gas and electiricity, will be good news for pensioners. However, if inflation continues to fall it could have a sting in the tail. The Treasury uses September's RPI figures to fix the annual increase in the basic state pension and other benefits. Last September the index was at 3.6 per cent, now it is at 3.4 per cent, meaning the next increase could be lower than the last.

Benefits are increased in April each year. The basic state pension should rise to at least £90.30 a week next April from the present £87.30 if inflation in September is at 3.4 per cent.