BoE: UK consumers see inflation rising in near term

Economy 12/7/2018, 1:03 PM
BoE: UK consumers see inflation rising in near term

The median rate in the Bank of England's quarterly survey landed at 3.1% for the year-over-year growth in consumer prices in November. The report published on Friday notes the headline rose by 0.2 percentage points from August. Consumers polled by TNS expect inflation to be 3.2% in the coming year, the highest in five years according to the methodology and compared to 3% from the previous update.

In the twelve months after that, however, they see a rate of 2.8% or 0.1 points down than in August. The median answer for the horizon, set at five years, is 3.5% after respondents put it at 3.6% last time. The majority, which increased to 53% from 51%, expressed the opinion that the economy would deteriorate if inflation accelerates. Expectations of interest rate increases within a year rose by one point to 53%.

The strong depreciation of the pound in the wake of the Brexit referendum has shot inflation higher and brought about a period of income squeeze, meaning salaries lagged behind the rise in prices. The gap has all but closed but the path forward depends on the arrangement with the European Union.

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