Five key numbers from the Bank of England's quarterly inflation report

Jessica Morris
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The Bank of England cut its forecast for economy growth to 2.5 per cent (Source: Getty)

The Bank of England's quarterly inflation report, setting out its forecasts for economic growth and inflation, was published today offering the first insight into officials' thinking since they entered election purdah six weeks ago.

Here are five key figures from the report:

1. Gross domestic product growth - 2.5 per cent:

The Bank of England has cut its economic growth forecast for this year to 2.5 per cent from 2.9 per cent, and to 2.6 per cent from 2.9 per cent for 2016.

"Growth is projected to be at or a little below its historical average rate throughout the forecast period, although remaining slack in the economy is absorbed," the report said.

Slack is spare capacity within an economy or how much room if has to growth without triggering inflationary pressure.

2. The rate of inflation - 0.6 per cent

Threadneedle Street expects inflation to be 0.6 per cent for 2015, before rising to 1.6 per cent in 2016 and 2.1 per cent the year after.

"In the very near term, inflation is projected to remain close to zero, as the past falls in food, energy and other goods prices continue to drag on the annual rate," the report said.

"Towards the end of 2015, inflation rises notably, as those effects begin to drop out."

3. Productivity growth - 0.25 per cent

The central bank cut its forecast for productivity growth this year to 0.25 per cent from 0.75 per cent. Additionally, the forecast for next year was also slashed to 1.25 per cent from 1.5 per cent.

Governor Mark Carney said predicting productivity was one of the committee's "most difficult judgments".

4. Wage growth - 2.5 per cent

Lower expected productivity growth will be reflected in wage growth - although official figures published this morning showed wage growth had risen to 2.2 per cent in March.

This meant it also downgraded expectations for wage growth this year to 2.5 per cent from 3.5 per cent.

Carney said that the number of people in employment has expanded significantly due to more older people working, a greater willingness to work longer hours, population growth as well as net migration. And these have kept a lid of wages despite high employment growth.

"Such strong growth in labour supply is unlikely to be sustained," Carney said. "Going forward, growth in the UK economy's potential will increasingly depend upon productivity".

5. Household consumption - 2.75 per cent

The central bank cut its forecast for household consumption from 3.75 per cent to 2.75 per cent for this year.

"Household spending should continue to be supported this year by the boost to real take-home pay from lower food and energy prices," Carney said.

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