UK Inflation Expectations Reach New High Since Oct 2022
LONDON (Reuters) -The British public's expectations for inflation over the longer term have risen this month to their highest since October 2022, when surging energy prices had pushed headline inflation to double digits, a Citi/YouGov survey showed on Wednesday.
Longer-term inflation expectations rose to 4.2% in March from 3.9% in February, while year-ahead expectations rose to their highest since October 2023 at 4.0%, up from 3.9%.
"For the (Bank of England) MPC, this survey will warrant continued caution with quarterly cuts the likely outcome for now," Citi economists Callum McLaren-Stewart and Michel Nies said.
Official data earlier on Wednesday showed British consumer price inflation slowed more than expected in February to 2.8% from 3%. However, the BoE expects inflation to gather steam and reach around 3.75% later this year and not return to its 2% target until late 2027.
Citi said other surveys, including one conducted by the BoE, had shown much lower long-term public inflation expectations and that its latest results should be treated "with a degree of caution".
The rise in long-term inflation expectations in the Citi survey was most marked in the 18-29 age group.
The survey was based on polling of 2,141 adults on March 20 and March 21.
(Reporting by David Milliken; editing by William James)
