UK inflation expectations rose in August after recent declines, according to a monthly survey by Citi and YouGov released on Tuesday.
Short-term inflation expectations for the next 12 months climbed to 3.9%, up from 3.4% in July. Longer-term price growth expectations increased to 4.1%, the highest since April, rising from 3.7% the prior month.
The reversal follows months of easing in public inflation expectations, which had been trending lower in recent data. The Bank of England is monitoring whether energy price volatility linked to regional tensions could translate into persistent inflationary pressures.
Citi noted that the uptick in expectations "is a hawkish development in this series," signaling potential challenges for policymakers aiming to stabilize prices. The bank added that next month’s release would provide clearer insight into the significance of the increase.
The survey results underscore the sensitivity of inflation expectations to external shocks, even as headline inflation has shown signs of moderating in recent months.
