London: Britain is witnessing a renewed rise in inflation expectations as public sentiment signals growing concerns over the cost of living. According to a monthly survey conducted by YouGov for the U.S. bank Citi, the British public now expects inflation over the next 12 months to reach 4.2%, marking the highest level since April of this year. The increase highlights rising anxiety about price pressures despite recent signs of stabilization in headline inflation figures.
Longer-term inflation expectations have also edged higher, rising to 4.2% from 4.1% in September. This convergence of short-term and long-term expectations suggests that households and businesses anticipate inflationary pressures persisting beyond the immediate future. Analysts note that these expectations can influence consumer behavior, wage demands, and investment decisions, potentially reinforcing inflationary trends if left unaddressed.
The surge in inflation expectations comes at a time when the Bank of England (BoE) remains cautious about adjusting interest rates. While policymakers have signaled a willingness to respond to persistent price pressures, the recent jump in public expectations may complicate the central bank's efforts to maintain price stability without derailing economic growth. Surveys like the YouGov-Citi poll are closely monitored by the BoE as they provide insights into the public’s perception of inflation, which can shape economic decision-making.
Economists warn that rising inflation expectations could amplify real economic pressures. If households anticipate higher prices, they may increase spending now, further driving demand-pull inflation. Similarly, businesses may raise prices or demand higher wages, creating a self-reinforcing cycle. As Britain navigates these challenges, policymakers are under pressure to balance the dual mandate of supporting growth while keeping inflation anchored.
The latest data underscores the persistent concerns about inflation in the UK economy and signals that both consumers and policymakers must remain vigilant. With expectations now at a peak not seen since spring, the coming months will be crucial in determining whether these concerns translate into tangible economic pressures or begin to ease.