UK Inflation Expectations Soar to Over-Year High

Long-term public inflation expectations in Britain have risen to their highest level in over a year, according to a survey from Citi and pollsters YouGov. The September survey showed that people expect inflation over the next 12 months to reach 4.5%, up from 3.9% in August.

The BoE is closely watching for signs of longer-lasting inflation pressures following the jump in energy prices caused by the Iran war. Citi noted a divergence between its poll and other inflation expectations surveys, including the BoE's Decision Maker Panel of businesses.

The spread between Citi/YouGov and DMP was 86 basis points as of August, well above the historical average of 16 bps. Citi suggested that household views may be given more weight by the BoE due to their sensitivity to short-term price rises.