The Bank of England expects the consumer prices inflation (CPI) rate to fall further in coming months away from its 2% target before climbing back towards that level in three years' time.
In a press conference Bank of England Governor Mark Carney said: "Although they are not permanent, the forces subduing inflation today are likely to persist for some time."
While low inflation eases the strain on household budgets, policy makers would be concerned were it to plunge too sharply as has happened in Europe where there are fears of a damaging deflationary spiral.
The Bank's projections for CPI at the start of next year are sharply lower than previously, with a CPI rate of 1% pencilled in for the first quarter compared with 1.9% projected at its previous inflation report in August.
It expects that monthly inflation will probably fall temporarily below 1% in the next six months and remain close to that level for most of next 2015 before heading close to its 2% target in three years' time.
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