Inflation is expected to have remained at a five-year low when official figures are published today, as the prospect that it will head even lower pushes forecasts of an interest rate hike as far back as 2016.
The measure of Consumer Price Index (CPI) inflation for October is predicted to have stayed unchanged from the previous month at 1.2%.
The low inflation environment coupled with warnings of gloom about the world economy has led economists to push back expectations for when the Bank will raise interest rates from 0.5%, where they have been held since 2009.
Mark Carney, the Governor of the Bank of England (BoE) has said that inflation is more than likely to fall below 1% over the next six months. Its growth expectations for next year have been cut from 3% to 2.9%.
Bank of England says inflation "more likely than not" to fall below 1% in next 6 months. Economic growth will be slower than expected
Inflation likely to remain close to 1% for next year with pay almost double that, says Mark Carney.
Poor families are struggling to make ends meet because of a sharp rise in the price of basic goods in recent years.
Since 2008, the cost of necessities has risen 28% while average wages have only gone up 9%, according to a report from charity the Joseph Rowntree Foundation (JRF).
The JRF found a single person needed to earn £16,300 a year to afford a minimum acceptable living standard, while a couple with two children needed to be bringing in £40,600.
Bank of England Governor Mark Carney said his warning that record-low interest rates will rise sooner than markets expect was "a personal view."
ITV News Economics Editor Richard Edgar reports:
Committee chairman pressing Carney that his Mansion Hse speech which took markets by surprise was a personal view.
It was the intended consequence of your speech to change expectations about the first move on interest rates, Carney is asked: "Absolutely"
Bank of England Governor Mark Carney told MPs there has not been an acceleration in "actual earnings" growth.
He told the Treasury Select Committee, "Since 2008 there's only been six individual months in total where average weekly earnings has been above inflation".
ITV News Economics Editor Richard Edgar writes:
After all the excitement about an imminent rise in rates, Carney tells committee of MPs that the data on wages is still weak[so no need yet?
Calm down everyone: Carney says what matters to borrowers is not the timing of first rate rise but their path: "gradual but limited" rises.
House prices are "spinning further out of control", a leading housing charity has warned after figures showed a 9.9% annual rise in UK values.
Campbell Robb, chief executive of Shelter, said: “Each rise in prices means more people stuck living in their childhood bedrooms, or trapped in the cycle of moving from one expensive rented home to the next.
“Worryingly, as house prices continue to rise some will be tempted to overstretch themselves in a frantic bid to get on the property ladder. But with interest rates currently at historic lows it’s a real concern that many might find themselves struggling to make ends meet in the future."
He added: “This is a problem that the government can fix. We need a new generation of quality part-buy, part-rent homes, and to make sure that small builders can get hold of the land and finance necessary to build them."
George Osborne says today's inflation figures show further evidence of Britain's economic security.
Asked whether house price rises of 9.9% were a cause for further action, the Chancellor said the Bank of England had been given further powers to intervene if necessary.
Brits are "still feeling the squeeze" despite inflation falling to a four-and-a-half-year low, Labour claim.
Wages after inflation have now fallen by over £1,600 a year under David Cameron and the link between the wealth of the nation and family finances is broken.
A huge turnaround would be needed to ensure working people aren’t worse off than when this Tory-led government came to office.
Inflation could fall to 1% by the end of the year, a leading economist has claimed.
Samuel Tombs, UK economist at Capital Economics, said producer price indicators, the strength of the pound making imports cheaper, and political pressure on energy bills were likely to see inflation ease further for the rest of the year.
"Against this low inflation backdrop, we believe the MPC is likely to tread cautiously and raise interest rates only very gradually over the coming years," he said.