Bank of England says inflation expectations picked up in May
INFLATION expectations over the coming year rose to 2.2 per cent in May, from a 13-year low of 1.9 per cent in February, according to a closely-watched survey released yesterday by the Bank of England.
Additionally, expectations over the next two years rose to 2.3 per cent from 2.1 percent, and were unchanged at 2.8 percent for the five years ahead.
“The fact that inflation expectations rose modestly in May … [shows that] the public do not expect deflation, [reinforcing] belief that there is very little likelihood of consumers in the UK delaying purchases in anticipation that prices will fall,” Howard Archer, chief economist at IHS, said.
Inflation turned negative in April, the first time since the 1960s, and remains well below the central bank’s target of two per cent.
Threadneedle Street has previously said it expects inflation to stay close to zero before rising notably towards the end of this year – as the impact of oil and food price deflation fades.
The net balance of people expecting interest rates to be hiked over the next year also rose, from a figure of plus 33 in May, up from plus 28 in February.