Increase further to 7.7%. this is above expectations and notably stronger than standard models of wage growth based on productivity, short term inflation expectations and tightness in the labour market would have predicted. chart seven gives you a brief insight into more of the entrails of the process because what this chart shows is a slave which you can see in light grey illustrating the range of forecasts that we can derive from the models. you can also see on the line, the mpc s projection for private sector wage growth. that s line and that projection is our judgment on the committee, you can see that wage growth is expected to ease more slowly in that line in the models would predict. what we have
Gradually. let me be clear, we do expect call goods inflation to ease over the rest of the year and there are indicators that suggest it could happen faster than our projection. as you can see, in this chart, out put producer price inflation has been slowing significantly since its peak in the middle of last year, add indicated by the orange line. that should help to reduce non energy consumer goods price inflation which is shown on the blue line. as cost pressures ease on the supply chain. as the chart shows, that has been the case when producer preservation has fallen in the past. the final component of inflation services prices which is now due beating more to inflation. as you can see in this
Has been very high. but it does appear to have peaked and as you can see on this chart, there are signs on the monthly figures that it is starting to ease. evidence collected by the bank s regional agents suggest that a moderation in food import prices being passed through the supply chain to consumer prices. so we do expect food price inflation to come down gradually over the rest of this year. the contribution from food price inflation falls accordingly in our near term projection. from about two percentage points to one .25 percentage points to one .25 percentage points to one .25 percentage points towards the end of the year. call goods price inflation, it is taking time for the four energy prices to work through the price chain and the price of imported goods are continuing to rise, despite the fall in export prices. that s why in our central projection we expect call goods price inflation to come down
Here in a nutshell is that the empirical models illustrate what might happen, wage setting will be based on inflation expectations. the best collective view of the committee is that we don t have enough evidence at certain to be sure that wages will be set in this way. in ourjudgment, upside surprises on wage and inflation will suggest that it will take longer for the second round effects for them to go away than it did for them to appear in response to a sharp rise in prices. interacting with a tight labour market, that is expected to result in a greater resistant in wage inflation. with it,. i also show this chart because the difference between empirical model outputs and the committee s best judgment which is obviously clear
Higher bank rate, inflation looks more higher bank rate, inflation looks more challenging. it sounds like the wa-e more challenging. it sounds like the wage price more challenging. it sounds like the wage price spiral looks like it s crystallising. what s gone wrong with the crystallising. what s gone wrong with the economy and has the bank lost control? | with the economy and has the bank lost control? lost control? i wouldn t agree with that. to lost control? i wouldn t agree with that- to start lost control? i wouldn t agree with that. to start with, lost control? i wouldn t agree with that. to start with, the lost control? i wouldn t agree with that. to start with, the good - that. to start with, the good news is, i said a few minutes ago that i think that the path of. the number that we saw. i showed you that chart and goods prices which compared, there is a major puzzle on that chart as to why you had this dislocation between consumer and producer prices. it has been puzzling us. we really had thought that we would start to see evidence of that fall sooner but we have seen it now. you can have a bit too much