MNI: UK Public Infla Expectations Steady, Above Target: BOE

-Year Ahead August Median Inflation Expectations 3.0% Vs 2.9% May

by Jamie Satchi

     LONDON (MNI) - The UK public expects inflation to tick-up in 2019 before

moderating in 2020, although seen markedly above the Bank of England's 2%

inflation target at both points, the latest BOE/TNS survey found.

     In the August TNS survey, conducted for the central bank, public

expectations for inflation a year ahead were 3.0% and 2.9% for the year after

that before rising to 3.6% in five years' time. These were broadly unchanged

from May, with the only change the year ahead expectations back then being the

year ahead data standing at 2.9%. The two years' ahead and five year out

expectations however mirror May's estimates. 

     The picture that emerges from the BOE survey is that public inflation

expectations remain elevated as headline inflation holds around 3.0%, and that

expectations remain above the BOE's own central projections.

     UK July inflation ticked up to 2.5%, driven by one off factors such as

rising energy prices and volatile computer games prices. Core inflation appears

to suggest an inflation rate lower than the 2.5% recorded. 

     In the August Inflation Report, the BOE forecast that headline CPI

inflation would peak this quarter (2.5%), gradually falling thereafter before

hitting the Bank's 2% target rate in Q3 2021.

--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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