The British public’s expectations for future inflation kept falling in July, according to the Citi/YouGov survey. Expectations for five or more years’ time dropped to 3.7% from 3.9% in June, and year-ahead expectations fell to 3.4% from 3.8%. The reading lands days before a Bank of England rate decision.
The British public’s expectations for future inflation continued to fall in July, according to a survey from U.S. bank Citi and pollsters YouGov that could help to reduce worries at the Bank of England about price pressures in the economy. Expectations for inflation in five or more years’ time, which are closely watched by the BoE, fell to 3.7% in July from 3.9% in June, the survey released on Tuesday showed.
Year-ahead expectations, which tend to be influenced by moves in short-term inflation and energy prices, decreased to 3.4% from 3.8%. The BoE’s policymakers routinely monitor inflation expectations for signs that price pressures could become embedded among consumers as well as businesses. Earlier this year, the surge in energy costs triggered by the Iran war prompted the central bank to pause its run of interest rate increases.
Callum McLaren-Stewart, an economist at Citi, named one risk to the trend: “a delayed increase in pump prices could trigger a small increase in expectations”. But he said pump prices react quickly to crude prices and that the scale of the increase in July was well below what was seen in Q2, so he thinks it is unlikely to have a meaningful impact.
Separately, a survey of British firms published last week showed they were planning smaller price and wage rises. The BoE is expected to hold interest rates on Thursday.
Source: Investing.com
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