Projection that we present today is very much into parts. Im going to begin with the first part. Starting near term outlook. This chart shows the evolution of Consumer Price inflation and its components since 2018. It shows that inflation has come off the peak in october last year and that it continues to fall over the rest of this year in our near term projection. Thats the piece showed in the shade of part of the chart. This fall can be attributed in large part to a full on contribution from energy. Fuel prices have declined, electricity and gas prices have stabilised, albeit at a higher level. The Dark Orange Bars on this chart show how the contribution from Energy Prices falling and turning negatively in the coming months. Giving off gems price cap on energy and gas bills, we expect inflation to take a further step down in the july dates will be published in two weeks time. That will come down to around 7 at that point. Following a larger step down in 0ctober s data to around about
illustrates that bank rates can secure return of inflation to the target. the market curve is higher than the current level bank rates in the coming quarters but then falls below it further out. averaging just under 5.5% over the next three years. a lot will depend on what happens in the labour market. there are signs that the labour market is loosening, the unemployment rate rest slightly at 4% in the three months and the ratio vacancies to the number of unemployed job seekers. that has continued to ease. as shown in chart six. the labour market remains strong. annual private section regular pay growth