Consumer price rises will slow over the months to come, according to the new Inflation Report.
The Bank of England updated on its economic expectations and confirmed that inflation rates were likely to fall, in a new report released this morning.
According to the new quarterly Inflation Report, the Consumer Price Index will dip to a low of 0.5 percent towards the end of the year before rising once more. On latest results, the government's preferred inflation benchmark stood at 2.9 percent.
Meanwhile, the Retail Price Index, an alternative inflation benchmark which includes property prices, recently dropped below zero to -0.4 percent, its worst result in nearly 50 years.
Falling prices - or deflation - retain the potential to greatly damage the prospects of economic recovery from a recession. This is because consumers and businesses tend to hold off on big-money products in the hope that they can pick up a bargain later - and because debts built up when prices were higher become proportionally more valuable and therefore harder to pay off in deflation conditions.
The Bank of England has embarked on radical policy action recently, which some analysts say could tip the balance too far in the other direction. The quantitative easing programme will see the bank purchase £125 billion worth of bonds and other assets by the summer - boosting the money supply and, it is hoped, the supply of cheap credit to consumers.
However, effectively printing money in this way has the potential to store up high inflation rates in the future.
The Bank also updated on its outlook for the economy in the new Inflation Report. It suggested that output hit a low in April, falling at an annual rate of 4.5 percent.
Growth was predicted to return at the beginning of next year.
