The Bank of England and Ipsos Mori have recently conducted a quarterly survey regarding the UK public’s expectations for inflation. The results, released on Friday, show a sharp drop in inflation expectations for the coming year.
According to the survey, the median UK public’s inflation expectations for the next 12 months fell from 3.5% in November 2021 to 3.1% in February 2022. This marks a notable decrease in inflation expectations, which had been rising steadily since June 2021.
The survey also showed that fewer people expect prices to increase for essential items such as food and household goods. In November 2021, 77% of respondents expected prices for these items to rise over the next 12 months. However, in February 2022, this figure dropped to 69%.
Overall, the survey suggests that the UK public is becoming more optimistic about the country’s economic recovery from the pandemic. The decrease in inflation expectations is likely due to a combination of factors, including lower energy prices and reduced supply chain disruptions.
However, the survey also highlighted concerns about wage growth and unemployment. Nearly half of the respondents said they were worried about their job security, while 48% believed that wages will not keep up with inflation over the next year.
The Bank of England closely monitors inflation expectations as part of its mandate to maintain price stability. The decrease in inflation expectations may influence the central bank’s decision-making process regarding interest rates and other monetary policies.
In conclusion, the Bank of England/Ipsos survey shows that the UK public’s expectations for inflation have dropped sharply in February. The decrease in inflation expectations may reflect greater optimism about the UK’s economic recovery, but concerns about wage growth and unemployment remain. The central bank will continue to monitor inflation expectations as it considers its next monetary policy moves.