Consumers still expecting above-target inflation

Inflation in the UK and Europe is expected to remain well above the Bank of England’s and European Central Bank’s targets, according to M&G’s Inflation Expectations survey.

The poll of 8,500 consumers across the continent, conducted in late November, found that the majority expected consumer price inflation (CPI) to be greater than 2 per cent on both a one-year and five-year view. In the UK, consumers were expecting a 3 per cent CPI inflation figure compared with the Bank’s 2 per cent target.

However, a significant number of UK consumers backed the Bank of England’s current strategy to achieve its inflation target. In contrast European consumers were shown by the survey to lack confidence in the ECB’s ability to maintain price stability over the medium term.

Article continues after advert

UK inflation fell to its lowest level in more than a year in October, registering 2.2 per cent on an annualised basis.