UK public inflation expectations tick higher: BoE

The British public’s expectations for inflation rose last month but remained within levels seen since the start of the Covid-19 pandemic, despite a recent jump in headline inflation, a Bank of England survey showed on Friday.

Inflation expectations for the year ahead rose to 2.7 per cent in August from 2.4 per cent in May, according to the survey, which was conducted by market research firm Kantar. They have kept in a range of 2.4 per cent to 2.9 per cent since the onset of the Covid-19 pandemic.

Longer-term inflation expectations rose to 3.0 per cent from 2.7 per cent in May, their highest since February 2020 – not long before Britain went into its first Covid-19 lockdown.

The BoE is keeping a close eye on gauges of inflation expectations to make sure that recent price rises, caused in part by global supply chain problems, are not becoming engrained in the collective psyche of the British consumer.

Earlier this week official data showed a record month-on-month jump in the annual rate of consumer price inflation, which surged to a nine-year high of 3.2 per cent in August – far above the BoE’s 2% target.