U.K. Consumer Inflation Expectations Rise to Three-Year HighBy
Pound’s depreciation is fueling faster British price growth
Some BOE policy makers worried about the inflation pickup
U.K. inflation expectations have risen to the highest level in more than three years and households are worried about the implications for the economy.
The Bank of England’s latest survey shows consumers’ median expectation for price growth over the coming 12 months is 2.9 percent, the highest such reading since November 2013. While the BOE may take comfort from the fact that the figure is close to its own forecast, five-year expectations also rose, to 3.2 percent.
With the pound’s drop since the Brexit vote fueling a surge in import costs, BOE Governor Mark Carney has said policy makers will tolerate a period of inflation above their 2 percent target to allow continued stimulus to support the economy. But he’s also said there’s a limit to that tolerance, and some officials have started to express concern about the price outlook.
In the quarterly Inflation Attitudes survey published on Friday, the BOE also said that 46 percent of consumers believe the economy would end up weaker if prices started to rise faster, against just 9 percent saying it would be stronger.
Asked about how well the BOE is doing its job to set interest rates to control inflation, the institution’s net satisfaction balance came in at 30 percent, little changed from the 31 percent reading in the last report in November.