A survey published yesterday showed that the British public’s expectations for inflation for the next 12 months and for further ahead are at their lowest since 2010, after they came down in February.
Expectations for 2014 fell from 2.4% in January to 2.2% this month, according to a poll carried out by YouGov. They also asked for people’s thoughts on inflation for the next five to ten years and found they had dropped from 3.2% to 3%.
Michael Saunders, the chief UK economist at Citi, said: “These figures are likely to reassure the (Bank of England) that the tightening labour market and strong house price gains are so far not destabilising inflation expectations, reinforcing the UK theme of strong growth with low inflation.”
This comes after inflation fell below the Bank of England’s 2% target for the first time in four years. In january it came down to 1.9%.
Lower public expectations for inflation are likely linked to the continuing struggle for wages to rise in real terms. The Labour Party have been on the attack about a cost of living crisis, in part caused by wages failing to match inflation.