Bank of England Inflation Expectations Fall After Methodology Change
The Bank of England's inflation expectations survey has reported lower readings in August, but the central bank warns that the shift cannot be read cleanly as a change in trend due to the methodology change.
The August survey by Savanta shows one-year-ahead inflation expectations at 3.2%, two-year at 2.9%, and five-year at 3.2%. These readings are lower than the previous May Ipsos survey, which showed expectations of 4.0% for the year ahead, 3.5% for two years ahead, and 3.9% for five years ahead.
The Bank of England notes that part of the apparent drop in inflation expectations reflects provider differences rather than a shift in public sentiment. The central bank attributes much of the drop to the change in survey company, which affects like-for-like assessment.