The Office for Budget Responsibility predicts that inflation will fall from 10.7% in Q4 2022 to 2.9% by the end of 2023.
Inflation dipped for the third consecutive month to 10.1% in January, but still remains near 40-year highs.
During today's Budget, chancellor Jeremy Hunt said that due to "changing international factors" alongside measures the government has taken, the OBR forecasts that the UK will "not now enter a technical recession this year".
Hunt said: "They forecast we will meet the prime minister's priorities to half inflation, reduce debt and get the economy growing."
Hunt added that the International Monetary Fund says the UK economy is on the 'right track'.
In the Budget, Hunt also announced that the OBR has revised its forecast for GDP growth this year. In November, the OBR forecast that GDP would fall by 1.4% in 2023, but has today revised this to 0.2%.
The OBR predicts that after this year, GDP will grow by 1.8% in 2024, 2.5% in 2025, 2.1% in 2026 and 1.9% in 2027.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented: "Jeremy Hunt wasted no chances in pulling the biggest rabbit from his hat, brandishing the forecast from the Office for Budget Responsibility that the UK will swerve a recession this year.
"Things were already looking up, with consumer and business confidence rising, and spending proving much more resilient. The rebound in the huge services sector in February had already raised hopes that two back-to-back quarters of negative growth will be avoided and now that more pieces of the jigsaw are now in place a rosier picture is emerging.
"But given that the cost-of-living crisis is still proving painful, economic activity is still likely to be slow to power up and a period of stagflation not super-charged growth is still expected. The Chancellor is gearing up to deliver fresh incentives to loosen a tight labour market, spark greater productivity and bring in foreign investment but it’s going to still be a hard slog ahead.”
