Economy

UK Public Inflation Expectations Hit New Record High: Citi/YouGov

The Bank of England has increased interest rates three months in a row.

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The Bank of England has increased interest rates three months in a row.

Economy

UK Public Inflation Expectations Hit New Record High: Citi/YouGov

The Bank of England has increased interest rates three months in a row.

Share this article

The British public's expectations for inflation over the next five to 10 years hit a record high this month, according to a survey that is likely to be noted with concern by the Bank of England.

U.S. bank Citi and polling firm YouGov said their gauge of expectations for inflation in five to 10 years' time rose to 4.4% in March from 4.1% in February.

With inflation hitting its highest levels since the early 1990s - 6.2% in the latest data - the BoE is worried that expectations for rapidly rising prices will become embedded in the economy, causing a self-perpetuating wage-price spiral.

The BoE raised interest rates earlier this month for the third meeting in a row but it softened its message about the outlook for further increases in borrowing costs.

Monday's survey showed public inflation expectations for the coming 12 months also hit a record of 6.1%, up from 5.6% in February.

Citi economist Benjamin Nabarro reiterated his warning of a growing risk that inflation expectations could become de-anchored and, although that was not his baseline expectation, "these risks do now merit particular vigilance."

The Citi/YouGov survey, which dates back to 2005, polled 2,114 people between March 21-22.

(Reporting by William Schomberg; Editing by Kate Holton)

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UK Public Inflation Expectations Hit New Record High: Citi/YouGov

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