15  12  All speeches are available online at www.bankofengland.co.uk/speeches  12  While simple, these maps suggest there is important information on economies and societies to be found by peering through different lenses: lenses that operate at different resolutions, as the striking UK regional differences in income, wealth and health demonstrate;  and lenses that focus on different economic  attributes, as the striking differences between the UK’s regional income and well-being maps demonstrate. Chart 8: Cartogram of UK well-being  Sources: ONS Annual Population Survey (APS) and Bank calculations. Notes: Responses to the question, “overall, how satisfied are you with your life nowadays?” where 0 is ‘not at all satisfied’ and 10 is ‘completely satisfied’ for 2016/17. UK NUTS 1 regions re-sized and coloured by mean response. (b)  Differences within regions  Given these striking regional differences in health, wealth and happiness across the UK, an interesting supplementary question is how those differences compare within-regions. As we alter the resolution at which we view the economy, do these differences narrow? Do economic patterns look different when 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  comparing them within and between regions? Or are these patterns self-similar at different resolutions, as when we use a microscope to study the shoreline? Chart 9 provides one visualisation of these patterns at different resolutions. These “violin” plots compare the distribution of income per head at the regional (NUTS 1) level with the distribution at NUTS 2 and NUTS 3 level.

Under the said assumption, output gap becomes clearly negative as of the third quarter of 2006 and the contribution of demand conditions to falling inflation increases. According to the projections produced under such conditions, inflation drops rapidly compared to the previous scenario and is realized between a 1.9 4.5 percent by the third quarter of 2007. Thus, the possibility of inflation falling evidently under the path consistent with the target increases (Graph 26). Risk elements Distinguished Participants, It should be emphasized once more that the forecasts that I have presented were produced under a main scenario, which was developed on the basis of the above-mentioned assumptions and shortterm outlook in the light of current data. In the event of a possible threat to the medium-term inflation outlook by risk elements, the Central Bank will review both its forecasts and the stance of monetary policy towards the future. Distinguished Guests, In the final part of my speech, I would like to touch on the risks in question. Uncertainties about the course of oil prices are the leading risk element with respect to the achievement of the inflation target in the coming period. In the forecasts produced in the previous Inflation Report, oil prices were assumed unchanged. However, these prices persisted to rise throughout this period and reached high levels in recent times. The unfavorable impact of oil prices on  BIS Review 67/2006  19  annual inflation became one of the factors that slowed down the decline in inflation expectations in the first quarter of 2006.