–UK June Year Ahead Inflation Expectations 2.4%, Down From 2.8% in May
LONDON (MNI) – UK year ahead and longer-term inflation expectations
both fell markedly in June, showing expectations declining along with
headline inflation rates.
The June YouGov/Citi survey showed year ahead inflation
expectations fell to 2.4% from 2.8% in May and 3.0% in April, bringing
them back down to just 0.4 percentage point above the Bank of England
Monetary Policy Committee’s target.
The fears of some MPC members that earlier elevated headline
inflation outturns would see the public lose faith in the MPC returning
inflation to target have not materialized.
The June year ahead inflation expectations reading was the
lowest since April 2010 and sharply down from the 3.9% recorded in the
same month a year ago.
The median for longer term inflation expectations, over the next 5
to 10 years, fell to 3.2% in June from 3.4% in May.
“These readings suggest that upside inflation risks are fading and
reinforce the likelihood that the MPC will resume QE at the July
meeting,” Citi economist Michael Saunders said.
The Citi data will reinforce the research published in the BOE’s
Quarterly Bulletin.
A paper in the QB concluded “It seems that the upside risk from
longer-term inflation – a belief that the MPC is less able, or willing,
to return inflation to target in the longer term – has not
crystallised,” the BOE research paper said, adding that the risk from
near term inflation expectations had diminished.
The most recent official data showed CPI fell to 2.8% in May from
3.0% in April.
–London Newsroom: Tel:+44207 862 7491; email:drobinson@marketnews.com
[TOPICS: M$$BE$,M$B$$$,MABDS$]
