Public expectations for inflation over the next five to ten years have hit a record high, according to a monthly survey that is likely to be noted with concern by the Bank of England.
Citi, the American bank, and YouGov, the pollster, said that their gauge of expectations for inflation for the period had risen to 4.4 per cent in March from 4.1 per cent in February.
With inflation at 6.2 per cent, its highest level since the early 1990s, the Bank fears that expectations for rapidly rising prices will spark a wage-price spiral. Its monetary policy committee raised interest rates this month for the third meeting in a row, but softened its message about further increases in borrowing costs.
The Citi/YouGov survey, which dates back to 2005, polled 2,114 people between March 21 and 22. The report showed that public inflation expectations for the end of the year had also hit a record of 6.1 per cent, up from 5.6 per cent in February.
Benjamin Nabarro, a Citi economist, reiterated his warning of a growing risk of rising inflation expectations, which merits “particular vigilance”.
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● Five-year US Treasury yields rose above those on 30-year bonds for the first time since 2006 yesterday, an inversion that intensified apprehension around the impact of the Federal Reserve’s efforts to tame inflation. Policymakers are mulling a series of interest rate rises as part of an aggressive bid by the central bank to curtail rampant price growth. Analysts said that the bond market was pricing in the prospect of this sharply slowing the expansion of the US economy.
