BOE: UK Inflation Expectations Highest Since Aug 2008

Britons' expectations of the rate of inflation next year rose in August to the highest level for three years, according to a survey published Thursday.


A survey of inflation attitudes conducted for the Bank of England by pollsters GfK NOP found Britons on average expect prices to rise 4.2% over the coming year--the highest rate recorded since August 2008.

Almost a third of those polled said they expect prices to rise by 5% or more.

When the survey was last conducted in May, respondents expected prices to rise 3.9% over the same period.

Longer-term expectations of inflation also increased, the survey found. Respondents said they expect the inflation rate to be 3.5% in two years' time and 3.5% five years from now, on average. In May, respondents said they expected inflation to be 3.2% two years ahead and 3.3% five years ahead.

The rise in inflation expectations follows the publication of official statistics Tuesday showing the rate of inflation in the U.K. increased to 4.5% in the 12 months to August from 4.4% in July.

The rise in expectations also follows the announcement of bumper increases in household utility bills by the U.K.'s major energy suppliers.

GfK NOP polled 2,054 people to compile the survey. The survey found 40% of respondents thought the BOE is doing a good job of controlling inflation, down from 43% in May. The proportion of those dissatisfied with the central bank's performance rose to 24% from 22%.