LONDON: British households are not expecting a major upsurge in inflation over the next 12 months, despite growing rancour within the ranks of the Bank of England over rising prices, according to a survey of consumers. Citi’s latest poll of British household inflation expectations over the next 12 months inched up just 0.005 percentage points to 2.62 per cent – the first survey since the general election.
Consumer price growth accelerated beyond the pace expected by the BoE in May – hitting a four-year high of 2.9 per cent – and is expected to breach 3 per cent in the coming months. Rising inflationary pressures have increased dissent on the BoE’s monetary policy committee over the suitability of its record low interest rate policy. June’s MPC meeting saw three members vote for a rate hike, against five for no change.
Since then, chief economist Andy Haldane has also come out in favour of a tightening in monetary policy later this year. Households’ long-term inflation expectations edged up to 3.1 per cent from 3 per cent, according to the survey which asks respondents what they think will happen to prices over a five- to 10-year horizon. “Expectations are close to long-run averages, but strong upward momentum that would call for urgent monetary tightening is absent in our view”, said Christian Schulz, economist at Citi. The survey was conducted between June 20-21 with 2,095 households.
