The British public’s expectations for inflation over the long term climbed to a record high in May after the U.S.-Israeli conflict with Iran triggered a sharp rise in global energy prices, according to the Bank of England’s latest inflation attitudes survey.
The survey showed that median expectations for inflation over the next 12 months increased to 4.0% in May, up from 3.2% recorded in February, reflecting growing concerns about the impact of higher living costs.
Expectations for inflation over the next five years also rose, reaching 3.9% in May compared with 3.7% in February. This marks the highest level since the Bank of England began collecting the data in 2009 and remains well above the central bank’s 2.0% inflation target.
Bank of England policymakers closely monitor public inflation expectations as an indicator of whether rising prices risk becoming embedded in consumer behaviour, which could make it more difficult to bring inflation back under control.