UK inflation expectations, lowest for years

6 March 2015

shoppers According to the Bank of England, the UK households' inflation expectations dropped to their lowest level in over a decade. Last month, inflation expectations for the coming year fell to 1.9%. The BoE reckons it could turn negative in the next couple of months.

This will pique the interest of the Bank's Monetary Policy Committee, who yesterday, voted to keep interest rates at 0.5%. Their survey displayed the proportion of Brits expecting interest rates to rise over the next year fell and the Bank have said that they could cut rates if low inflation becomes embedded. That said, Governor Mark Carney thinks there'll be a rise.

YouGov also did a similar survey, which also showed that the British public's expectations for inflation in the next 12 months fell.

Basically, households are expecting prices to go up in 2015, but at a much slower rate than seen before, thanks to inflation falling to record low. However, there's usually something of a disconnect between the perceptions of inflation and the official consumer prices index (CPI), so we'll just have to wait and see.

TOPICS:   Banking   Economy

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