UK public's inflation expectations jump in July - Citi/YouGov
Reuters
Published Aug 03, 2021 11:15
Updated Aug 03, 2021 12:00
By David Milliken
LONDON (Reuters) -The British public's expectations for inflation over the coming year jumped in July in response to recent rising prices,although longer-term expectations remained stable, a monthly survey showed on Tuesday.
The Citi/YouGov survey showed public inflation expectations for the next 12 months rose to 3.1% in July from 2.8% in June, taking this measure further above its long-run average though below December's peak of 3.8%.
British consumer price inflation hit a three-year high of 2.5% in June and the Bank of England looks set to raise its near-term inflation forecasts on Thursday, though it is likely to stress that the increase will be temporary.
Longer-term inflation expectations for the next five to 10 years held steady at 3.4%.
Citi said the rise in short-run price expectations probably reflected fears of higher household energy bills later this year as well as the recent faster-than-expected rise in CPI due to higher oil prices and post-COVID supply-chain bottlenecks.
The BoE could draw some comfort from the fact that this had not yet fed into longer-run inflation expectations, but would need to be watchful that higher headline inflation later in 2021 did not push long-term price expectations higher.
"A marked increase here could yet force the Bank to tighten policy even if the recovery is incomplete," Citi said.
The BoE looks at public inflation expectations as a guide to how businesses will set prices and the extent to which workers will push for bigger pay rises.
The survey also showed that an above-average percentage of people surveyed said they did not know how inflation would change in future, creating a greater chance of a shift in long-term expectations, Citi added.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.