Long-term inflation expectations among the British public fell to a record low this month, even though they anticipate higher inflation over the next year, according to a monthly survey published on Thursday.
Inflation expectations over the next five to 10 years fell to 2.4 percent, the lowest since the Citi/YouGov survey began in November 2005.
For the next 12 months, inflation expectations jumped to 1.8 percent compared with 1.5 percent in June, the highest level since November 2014.
“We expect the Bank of England to look through the likely short-term inflation spike and focus on declining long-term inflation expectations,” Citi economists said in a note.
“While still above the Bank’s 2 percent target, the decline by a full percentage point over the last three years, along with short-term worries about growth, warrants decisive Bank of England action.”
Source: Reuters (Reporting by Andy Bruce, editing by David Milliken)