UK inflation expectations fall in October, Citi/YouGov survey shows

A customer shops for vegetables at gourmet grocery store Andreas, in London, Britain, March 28, 2024. REUTERS/Isabel Infantes Purchase Licensing Rights , opens new tab LONDON, Oct 29 (Reuters) - The British public's expectations for future ​inflation fell for the first time in two months in ‌October, though this was unlikely to stop the Bank of England hiking rates next week, analysts at Citi said on Thursday. Expectations for ​inflation in five or more years' time, which ​are closely watched by the Bank of England, ⁠fell to 4% from 4.3% in September, according to ​a survey from US bank Citi and pollsters YouGov ​published on Thursday.

Sign up here. Year-ahead expectations, which tend to be influenced by moves in short-term inflation and energy prices, decreased to 4.2% from ​4.5%. Citi said there was little obvious explanation for ​the drop, given the rise in oil and gas prices continued ‌in ⁠October and tensions remained high in the Iran war, keeping inflation risks high. "For monetary policy, a one-month easing in household inflation expectations is unlikely on its own ​to have an ​impact on ⁠the Bank of England's reaction function," it added.

"We would expect the MPC (Monetary Policy ​Committee) to treat October's data as encouraging ​at the ⁠margin rather than as grounds for a substantive change in direction." Investors expect a quarter-point rate hike from the ⁠BoE ​next Thursday, a move Citi said ​seems "all but guaranteed", with another move likely during the first quarter of ​next year. Reporting by Yoruk Bahceli, editing by William James Our Standards: The Thomson Reuters Trust Principles. , opens new tab Suggested Topics: United Kingdom X Facebook Linkedin Email Link Purchase Licensing Rights