Public expectations on future inflation in UK ease slightly

Citi data shows predictions for level in 12 months' time dipped in April

A customer at a market in London. Food price inflation remains high in the UK. EPA

The expectation of the British public of what level inflation will be at in 12 months' time dropped slightly in April.

Figures from the banking group, Citi, said its monthly survey conducted by market research company YouGov showed public expectations for inflation in a year's time slipped to 5.2 per cent in April from 5.4 per cent in March.

Meanwhile, people's expectations for five to 10 years ahead fell to 3.6 per cent from 3.7 per cent.

The data comes a little over a week before the Bank of England's Monetary Policy Committee meets to set interest rates again, when a 12th consecutive increase is widely forecast.

Inflation in the UK is currently 10.1 per cent, more than five times the Bank of England's 2 per cent target.

At the moment, investors put the chances of a 0.25 per cent increase in interest rates on May 11 at 92 per cent. Meanwhile, economists calculate that the chance of inflation falling to 5 per cent by August is about 50 per cent.

“Today’s data still suggest UK inflation expectations overall remain anchored at target-consistent levels,” said Citi economist Benjamin Nabarro.

“With acute shortages and food inflation primarily responsible for recent volatility, we think risks around these data are more likely to ease in the months ahead than intensify further.”

Last week, the International Monetary Fund said that while central banks should be focused on raising rates to bring inflation down, they should also be aware and nimble to the possibility of more tension in the financial sector brought on by the recent turmoil involving the likes of Silicon Valley Bank, Credit Suisse and now First Republic bank.