Consumer price index inflation during March reached 2.7 per cent as the devaluation of sterling since the European Union referendum result continued to feed through into prices, while the Bank's economists believe average weekly earnings will only rise by two per cent this year.
Prime Minister Theresa May, who has called a national election for June 8, will probably draw attention to the lowest unemployment rate in almost 42 years as companies continued to hire workers at a fast pace.
"Having hovered close to zero back in 2015, inflation has really picked up in 2017, doubling in the last six months alone and now at its highest level for nearly four years", said Matt Whittaker, chief economist at the Resolution Foundation. "Fuels & lubricants for personal transport equipment accounted for 7.8% of the CPI weights", the department said.
Despite the weak wage growth, there are signs of continued strength in the United Kingdom labor market.
The unemployment rate unexpectedly fell to 4.6% for the three months to March, data from the Office for National Statistics showed on Wednesday, when it was expected to remain at 4.7% for the third month.
The employment rate was 74.8 per cent, the highest since records began in 1971.
The Bank said in its inflation report that CPI would peak at 3% later this year as the pound's slump since the Brexit vote causes price tags on everyday items to climb higher.
A separate study by the Chartered Institute of Personnel and Development said employers expected to increase pay by just 1% in the coming year.
The government capped annual basic pay rises for most public-sector workers at 1 percent in 2013, after a three-year pay freeze. Real income levels of British households have come under strain this year as living costs have risen more sharply than wages.
British inflation rose to its highest level since September 2013 last month, according to official data on Tuesday that underlined a growing squeeze on households ahead of the June 8 national election. The figure was 386,000 higher than in the corresponding period past year and well above analysts' expectations for an 21,000 gain.
The firmer Sterling tone will have some impact in dampening inflation pressures as the sharp increase in import prices will moderate and second-round effects will be crucial for medium-term trends.