British households' expectations for future inflation decline in October, pointing to slightly softer price outlooks among consumers. Longer-term expectations tracked by the Bank of England fall alongside shorter-term views, according to the latest Citi and YouGov survey.
Highlights
- Citi and YouGov report UK five-year-plus inflation expectations fell to 4% in October from 4.3% in September.
- UK year-ahead inflation expectations declined to 4.2% in October from 4.5% a month earlier.
- Easing long- and short-term inflation expectations point to reduced public concern about future UK price pressures.
October survey signals softer price outlook
As reported by Reuters, citing Citi and YouGov, expectations for inflation in five or more years' time fall to 4% in October from 4.3% in September, a measure closely watched by the Bank of England.Year-ahead inflation expectations also decrease, dropping to 4.2% from 4.5% in the previous month.
Implications for UK monetary policy
The decline in both long-term and short-term inflation expectations suggests some easing in public concern about future price pressures in the UK.Because one-year expectations tend to be influenced by short-term inflation movements and energy prices, the October reading indicates consumers are seeing a modest improvement in the near-term inflation outlook.
In our earlier article, Bank of England Deputy Governor Sarah Breeden said the UK economy has weathered the energy price shock better than initially expected, helped by fiscal support and Bank of England actions that steadied markets. She also stressed that inflation and market volatility remain key risks, requiring ongoing monitoring and policy flexibility to safeguard UK financial stability.
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