Inflation Expectations in the UK

LONDON (Reuters) – The British public’s expectations for inflation over the medium term remain at their highest in several years, though short-term expectations have fallen, according to a Bank of England survey on Friday, ahead of its interest rates decision next week.

The central bank closely monitors surveys of inflation expectations among the public and investors to gauge how likely people are to demand wage increases or accept higher prices for goods and services.

May’s survey indicated that expectations for inflation in five years’ time held steady at 3.6%, unchanged from February’s reading, which is the highest since November 2019.

Expectations for inflation in one to two years’ time remained at 3.2%, the highest since November 2022, while expectations for one year’s time fell to 3.2% from 3.4%.

Britain’s Office for National Statistics reported that consumer price inflation rose to 3.5% in April, up from 2.6% in March.

The BoE survey was conducted among individuals aged 16-75 between May 9 and May 13.