However, despite the record fall in some prices, the UK's underlying inflation rate remained at 2.6 per cent, above the Government's 2.5 per cent target, the Office for National Statistics (ONS) said.
Prices of clothes and shoes fell by 6.8 per cent last month - the largest monthly drop since records began in 1947 - as retailers slashed prices in an attempt to draw consumers back into the shops.
Tough conditions on the high street also hit prices of household goods, including furniture and electrical appliances. Taken together, the prices of household goods fell by 4.7 per cent, the largest monthly fall since records began in 1956.
Despite these sharp falls, increases in non-seasonal food prices and higher fuel and light charges meant the underlying rate of inflation remained unchanged at 2.6 per cent in January. This was the second consecutive month that underlying inflation overshot its target.
Analysts said the data made further interest rate cuts next month look less likely, and the pound hit a record high against the euro, closing at 68.45p.
The headline rate of inflation - which includes mortgage interest payments - fell 0.4 per cent to 2.4 per cent, the lowest rate since September 1996.
The drop was largely due to lower mortgage costs, analysts said, with lenders passing recent interest rate cuts onto consumers.