UK Inflation Expectations Rise for the Next 12 Months

According to a monthly survey conducted by Citi and YouGov, expectations for inflation among British households rose again in October for the next 12 months, increasing the likelihood that the Bank of England will only cut interest rates once in the next quarter. The survey indicated that the inflation expectation for one year ahead rose from 2.6% in June to between 3.2% and 3.3% in October. Expectations for 5-10 years ahead also increased from 3.6% in October to 3.8%, which is 0.8 percentage points above June's lowest level. Citi economist Benjamin Nabarro stated, "This situation may provide a continuing reason for caution, implying quarterly rate cuts in the near term for the Monetary Policy Committee."