UK inflation expectations ease in May, offering Bank of England some relief

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Dan Blystone

01.06.2026

UK inflation expectations ease in May, offering Bank of England some relief — UK inflation eases in May

British households' inflation expectations ease in May after the March surge linked to the Iran war and higher oil prices. The moderation gives the Bank of England some reassurance that the shock may prove less persistent, even as expectations remain above pre-crisis levels.

Highlights

Households' one-year UK inflation expectations fell to 4.7% in May from 5.0% in April, according to YouGov/Citi survey of 2,030 adults.
Longer-term inflation expectations declined to 4.0% from a peak of 4.5%, but both short- and long-term measures remain above February levels.
Bank of England projects consumer price inflation near 4% by end-2024 but warns inflation could exceed 6% if energy and goods prices rise.

May survey points to softer price outlook

As reported by Reuters, a monthly survey conducted by YouGov for U.S. bank Citi shows households' expectations for inflation in one year's time falling to 4.7% in May from 5.0% in April and a peak of 5.4% in March.

Longer-term inflation expectations, which the Bank of England watches as a signal of how difficult it may be to return inflation to its 2% target, fall to 4.0% from a peak of 4.5%. Citi economists May Rostom and Callum McLaren-Stewart say they continue to expect the jump to unwind reasonably quickly, especially if a U.S.-Iran deal is reached.

Even so, both short- and long-term measures remain above their February readings of 3.3% and 3.6% respectively, before the closure of the Strait of Hormuz pushed oil prices up by around 50%. Citi says YouGov surveyed 2,030 adults on May 20 and May 21.

BoE faces year-end inflation risks

Recent official data show British consumer price inflation falling to 2.8% in April as earlier one-off price rises drop out of the annual comparison and government measures shift environmental levies away from bills and into general taxation.

However, the Bank of England still expects inflation to approach 4% by the end of the year, based on an assumption that energy prices gradually fall over the course of the year. In a more adverse scenario, where energy prices rise further and broader goods and services costs also increase, the central bank sees inflation exceeding 6%, although that remains below the peak of more than 11% reached in October 2022.

Our earlier report on sterling’s reaction to the U.S.-Iran negotiations and renewed tensions around the Strait of Hormuz explained how shifts in oil prices were keeping UK inflation risks in focus. We also noted that the pound stayed relatively resilient thanks to still-high UK interest rates, even as markets weighed how energy-driven inflation could shape the Bank of England’s policy path.

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