The Bank of England's governor, Mark Carney, has said that falling food and energy prices over the past few months is responsible for around two-thirds of the difference between current inflation level and the target level.
Stating that the UK is not currently in deflation, Mr Carney added that the falling costs of fuel - with oil prices having halved over the past six months - is also expected to boost take-home pay for workers across the country.
ITV News economics editor Richard Edgar is tweeting from the announcement:
"More likely than not that CPI inflation will turn negative at some point in the spring" says Carney but "UK is not experiencing deflation"
Economy to get a boost from low oil prices - 2.9% next year (from 2.6%) and 2.7% in 2017 (from 2.6%) - Bank of England forecasts
Take home pay will grow more than twice as fast as expected, largely because of lower oil (energy/petrol) costs - up 3.5% from 1.25% in Nov.
Separate your inflation from your interest rates with this explainer of the key terms you will hear in today's Inflation Report.Read the full story ›
An army of price checkers travels the UK to calculate how much prices are rising. ITV News' Alice Tarleton spent the day with one of them.Read the full story ›
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.