LONDON (Reuters) – The British public’s expectations for inflation in the short term hit their highest level in more than a year in February, according to a Citi/YouGov survey on Thursday that underscored the challenges facing the Bank of England.
The survey showed households’ inflation expectations for the year ahead stood at 3.9% last month, up from 3.5% in January and the highest level since January 2024.
Longer-term expectations rose to 3.9% from 3.7% in January.
“For the Monetary Policy Committee, the pickup in inflation expectations will be a challenging, but perhaps predictable, outcome,” analysts at Citigroup said.
The BoE, which held interest rates at 4.5% on Thursday, is keeping an eye on inflation expectations among other gauges of price pressures in the economy.
“These increases could be broadly explained by households responding to actual inflation and in particular salient prices, such as food and energy, but they nevertheless represented an upside risk to future pay and inflation dynamics,” the minutes from the BoE’s Monetary Policy Committee meeting, said.
The BoE/Ipsos measure of households’ inflation expectations for the coming 12 months – published last week – rose to 3.4% in February, the highest since August 2023.
The central bank said on Thursday its Decision Maker Panel survey of expectations among businesses for consumer price inflation inched up slightly at the start of the year.
(Reporting by Muvija M; editing by William Schomberg)
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