–Year-Ahead Expectations Rise To 2.8% y/y In May Vs 2.2% In April
–Year Ahead Expectations Highest Since October 2008
–But Long-Term Inflation Expectations Remain Stable
LONDON (MNI) – The May YouGov/Citi survey of UK inflation
expectations among the general public shows surging short-term inflation
The median for Inflation expectations in the year ahead surged to
2.8% y/y in May from 2.2% y/y in April. Inflation expectations are
the highest since October 2008, and the jump from April to May (up 0.6%)
matches January 2008 as the biggest monthly jump since the
survey began in 2005.
However, the median for inflation expectations over the longer term
(next 5-10 years) edged up only slightly, to 3.1% y/y in May from
3.0% y/y in April, having been 3.3% in March.
Citi explained that “The latest YouGov survey was carried out over
21-24 May, and hence inflation expectations may have been lifted by the
high April inflation data (released May 18), rising petrol prices, plus
press reports that VAT is likely to be hiked”.
“But, the crucial point for the MPC probably is that longer-term
inflation expectations have not (so far) been destabilised, remaining
around 3% y/y since late-2008,” said Citi’s UK Economist Michael
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