UK Inflation Expectations Rise to 4.5% Amid Energy Price Surge

A recent survey conducted by Citi and YouGov found that UK households' inflation expectations rose to 4.5% in September, up from 3.9% in August.

The long-term expectations for price increases also increased to 4.3%, the highest level since June 2025, excluding a surge recorded in March 2026.

This rise in inflation expectations is a concern for the Bank of England (BoE), which is monitoring whether the surge in energy prices caused by the war in Iran will fuel inflationary pressures that could persist for longer.

Citi noted a gap between household inflation expectations and other inflation expectation surveys, including the BoE's Decision Maker Panel, which measures business sentiment. The gap was 86 basis points in August, well above the historical average of 16 basis points.