Inflation expectations among the British public have surged in March, according to a survey published on Tuesday that is likely to add to worries at the Bank of England over the inflationary impact of the conflict in the Middle East.
The monthly survey by YouGov for U.S. bank Citi showed short-term inflation expectations leapt to 5.4% in March from 3.3% in February, hitting their highest level since 2023 when Britain’s official inflation rate was above 10%.
Long-term expectations increased less sharply to 4.5% from 3.6%, Citi said.
After showing declines in recent months, the figures were likely to revive concerns on the BoE’s Monetary Policy Committee about the persistence of inflation pressure in Britain’s economy, Callum McLaren-Stewart, UK economist at Citi, said.
Last week, the MPC voted unanimously to keep rates on hold and some members said an increase in borrowing costs might be needed if energy prices remain high. That would add to the strains on an economy already struggling to grow.
British government bond yields have risen more sharply than those of many other countries since the start of the U.S.-Israeli war on Iran as investors worry about the country’s reliance on imported gas and its inflation susceptibility.
McLaren-Stewart said some BoE policymakers might argue against reading a lot into one month’s figures.
“However, it’s difficult to avoid the reality that this is a significant jump,” he added.
(Reporting by Catarina Demony）
