total average weekly earnings ( awe ) growth ( including the public sector ) is forecast to be 6¾ % in 2023q4, higher than a year ago and compared to a forecast of 4¼ % in the november 2022 mpr forecast, which was driven by a much more significant expected loosening in the labour market. the annual rate of growth of awe private sector regular pay, which should give a better indication of underlying labour market pressures, remained high at 7. 8 % in 2023q3, slightly lower than its peak of 8. 2 % in the second quarter but still above the rate of 7. 3 % in 2022q4. while pay growth has remained high across a range of indicators at around 7 %, the further acceleration of awe growth earlier in the year is not apparent in other survey based series4. the outlook for the economy having looked backwards let me now turn to the future ; the mpc set out its updated best collective judgement on the outlook for the next three years in the november mpr. overall my expectations for the outlook for the uk economy and the risks around it are in line with the forecasts presented. this is truer now than has been the case with recent mpr forecasts, with the november 2022 probably marking the low point in my degree of 4 for example as suggested by the bank dmp survey, indeed wage tracker and hmrc real time information see monetary policy report - november 2023 | bank of england for further information. bank of england commitment to its role as our best collective judgement5. i want to briefly set out the reasons why this is the case but i won ’ t have time, except in passing, to develop my thinking on how we make use of the forecast. you ’ ll be hearing much more on the subject from charlie bean later this afternoon who i am sure will have plenty of insights. and we all look forward to seeing what ben bernanke concludes when he completes his review of the mpc ’ s approach to forecasting next spring. 6 focusing first on the short term outlook for the months ahead, i see our forecasts as being well aligned with the recent main trends in the economy. on activity there are increasing signs that higher interest rates are weighing on demand, resulting in quarterly gdp growth around zero and with weaker demand leading to further easing in labour market tightness with unemployment continuing to pick up. sources : bloomberg finance l. p., department for energy security and net zero,

##s made in november 2023. brackets refer to forecasts made in november 2022. developments over the last year the table brings out five of the key features of uk economic developments over the last year. first, the double - digit peak and subsequent sharp fall back in headline cpi inflation, which has been broadly in line with our november 2022 forecast. second, the divergent trends in the contributions of the main components of inflation, in particular the much greater negative contribution from energy which has been largely offset by a much greater positive contribution of services inflation, a major indication of potential inflationary persistence. third, the greater resilience than expected in activity, closely linked to the sharp easing in energy price pressures but also the tightness of the labour market : the fourth key feature. this in turn has supported higher than expected wage growth, the fifth main feature. i will come back to say something about market expectations for bank rate later. bank of england sources : ons and bank calculations. in contrast with 2021 and 2022, chart 1 shows developments in headline cpi inflation have followed the track of our short term forecasts more closely over the last year. inflation peaked at 11. 1 % in october 2022 but remained above 10 per cent until april 2023, reflecting the cumulative impact of the two unprecedented global shocks, the covid pandemic and russia ’ s invasion of ukraine working through to consumer prices. since april 2023 inflation has fallen back sharply, as household energy bills in particular have come down. the resetting of the price cap in october drove a further sharp fall in headline cpi to 4. 6 %, as published this week, slightly below our latest forecast both for the month and for 2023q4 as a whole3. 3 some of the downside news in cpi inflation was driven by a larger than expected fall in services inflation from a slowdown in the prices of airfares, accommodation and rents. bank of england sources : bloomberg finance l. p., department for energy security and net zero, ons and bank calculations. notes : pink diamond represents october 2021 inflation outturn. ( a ) left hand side panel shows cpi inflation and cpi inflation projections up to and made in november 2022. right hand side panel shows cpi inflation and cpi inflation projects up to and made in november 2023. figures in parentheses are cpi basket weights in 2022 and 2023 respectively. ( b ) data to september 2023. bank staff projections from oct 2023