News   /   Economy

UK public's inflation expectations rocket to record high: GfK

People shop at market stalls, with skyscrapers of the CIty of London financial district seen behind, amid the coronavirus disease (COVID-19) pandemic, in London, Britain, January 15, 2021. (Reuters photo)

A record proportion of the British public thinks inflation will accelerate over the next 12 months, according to data that could further boost expectations that the Bank of England will raise interest rates next month.

Some 48% of people surveyed this month by consumer research firm GfK expected prices to increase more rapidly over the next 12 months, up from 34% in September, the figures seen exclusively by Reuters showed.

It marked the highest share since records began in January 1985, when Margaret Thatcher was prime minister and more than a decade before the BoE became operationally independent.

The surge in inflation expectations follows a month of rocketing gas prices that have caused the collapse of several British energy suppliers, leaving households faced with the prospect of hefty bills in 2022.

Global supply chain problems as the world economy reopens from COVID-19 lockdowns and labour shortages, exacerbated by Brexit, have added to Britain's recent inflationary tilt.

The BoE has said it expects inflation to exceed 4%, more than double its target, soon before easing back.

Economists increasingly expect the BoE will become the first major central bank to raise borrowing costs - possibly at its next policy announcement on Nov. 4.

"More and more shoppers expect that costs for goods and services will jump dramatically in the next 12 months," said Joe Staton, client strategy director at GfK.

"This rapid increase will impact our ability to shop and save, and our willingness to spend at a time when our incomes are outpaced by inflation."

BoE rate-setters are keeping a close eye on gauges of inflation expectations as they weigh up whether to raise interest rates.

On Sunday BoE Governor Andrew Bailey said the BoE would have to act if it saw a surge in inflation expectations in the medium term. Last month the BoE defined medium-term inflation expectations as five to 10 years from now. read more

While the GfK's gauge of inflation expectations covers the only the next 12 months, the scale of the move is likely to catch the eye of members of the BoE's Monetary Policy Committee. The data are collected as part of GfK's monthly Consumer Confidence Index, which dates back to the early 1970s. The overall confidence index fell in October to an eight-month low.

"Consumers are already nervous about the state of their personal finances. The spectre of rising costs can only add to that growing concern," Staton said.

Before Brexit, GfK's price expectation figures were freely available as part of the European Commission's monthly consumer surveys of EU countries, but have not been publicly available since the start of the year.

The survey of 2,000 Britons was conducted Oct. 1-13.

(Source: Reuters)


Press TV’s website can also be accessed at the following alternate addresses:

www.presstv.co.uk

SHARE THIS ARTICLE
Press TV News Roku