Chancellor George Osborne expects both inflation and unemployment to fall over the course of this year.
In his Budget speech today, Osborne said inflation is expected to fall from its current 3.7% to 1.9% by the end of 2012. The official consumer prices index target will be maintained at 2%.
The chancellor also predicted that unemployment will fall from the 17-year high seen at the moment, while the unemployment benefit claimant count is also tipped to ease.
The Office for Budget Responsibility predicts that unemployment will peak at 8.7% this year then fall to 6.3% in five years, Osborne revealed.