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

-Year Ahead November Median Inflation Expectations 3.2% Vs 3.0% August

by Jai Lakhani

     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 November TNS survey, conducted for the central bank, public

expectations for inflation a year ahead were 3.2% and 2.8% for the year after

that before rising to 3.5% in five years' time. These were relatively similar to

August, with the year ahead expectation higher by 0.2pp but both the two year

and five year expectations were lower by 0.1pp relative to August. 

     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 October inflation moved down to 2.4%, driven through foods and

non-alcoholic beverages moderating as well as clothing and footwear. Core

inflation appears to suggest an inflation rate lower than the 2.4% recorded.

However, given the recent Brexit uncertainty, it is not surprising higher

inflation expectations are on the table. 

     In the November 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 Q4 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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