BRITAIN fell into line with its Continental counterparts yesterday when it adopted a new system of measuring inflation.

As trailed in the Chancellor's pre-Budget report last week, the Government will use the Consumer Prices Index (CPI), otherwise known as the Harmonised Index of Consumer Prices (HICP).

The system replaces the long-standing Retail Prices Index (RPI) which also took into account the impact of housing and council tax costs.

The move to CPI was marked by new figures which showed that slower growth in the prices of clothes and shoes helped to reduce the inflation rate by 0.1 per cent.

The CPI fell to 1.3 per cent last month from 1.4 per cent during October, according to data from the Office for National Statistics (ONS).

The last time inflation on the CPI basis was lower was in June this year, when the annual rate fell to 1.1 per cent, the ONS said.

The figures sparked speculation that further interest rate rises would be put off, at least until February.

Simon Rubinsohn, chief economist at stockbroker Gerrard, said the widely held view among economists was that the Bank would next adjust rates in February.

He said: "We would not be surprised if the Monetary Policy Committee chooses to wait a little longer before moving, particularly if the subdued inflation picture is sustained and the consumer continues to shun the high street."

Graeme Leach, Institute of Directors chief economist, said the Bank's long range inflation forecast was a more significant factor in setting interest rates than monthly data.

But he added: "The figures lend support to the IoD's view that interest rates are unlikely to rise above 4.5 per cent next year."

The price of clothing and footwear, and women's clothing in particular, rose by less than it did last year, when the increase in prices was greater than the seasonal norm, the ONS said.