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UK Inflation Expectations At 5-year High: BoE/TNS Survey

LONDON (Alliance News) - UK inflation expectations for the coming year rose to their highest ...

Alliance News 7 December, 2018 | 10:58AM
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LONDON (Alliance News) - UK inflation expectations for the coming year rose to their highest level in five years, survey data from the Bank of England showed on Friday.

Median expectations of the rate of inflation over the coming year were 3.2%, compared to 3.0% in August, the results of the quarterly Bank of England/TNS Inflation Attitudes Survey showed.

The 3.2% expectation was the highest since the November survey of 2013, when the year-ahead inflation was projected at 3.6%.

The survey was conducted between November 2 and 6 among 2197 people. The Bank of England target's inflation at 2%. In October, inflation was 2.4%. Price growth hit a peak of 3.1% in November 2017. Survey respondents said the current rate of inflation was 3.1% versus 2.9% in the August survey. They expect inflation to be 2.8% in two years' time and 3.5% in five years. Regarding the future path of interest rates, 53% of survey respondents expected rates to rise over the next 12 months, which was less than the 58% in August. Britain is preparing to leave the EU on March 29, 2019. The Bank of England has warned that a no-deal Brexit would cause a severe recession in the UK, the kind not even seen during the global financial crisis a decade ago.

The central bank's analysis projected that inflation could hit 6.5% as the pound dives in a no-deal or disorderly Brexit.

BoE Governor Mark Carney also predicted that food prices could jump as much as 10% if there is a 25% slump in the pound due to a no-deal Brexit.

Elsewhere on Friday, survey results from IHS Markit showed that permanent placements and temporary billings grew softly in November. However, temporary pay grew at the fastest pace since July 2007.

Copyright RTT News/dpa-AFX

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