UK inflation expectations weakest in nearly six years: survey

[LONDON] Expectations in Britain for inflation in the year ahead have fallen to their lowest level in almost six years, a survey showed on Monday.

The monthly Citi/Yougov survey found year-ahead inflation expectations fell to 1.5 per cent in December from 1.8 per cent in November, touching their lowest level since February 2009.

Expectations for inflation over the next five to 10 years fell to 2.7 per cent from 2.8 per cent last month, the lowest level since the survey began in 2005.

"As in recent months, expectations of deflation are not widespread," Citi economist Michael Saunders said, adding the survey would be welcome news for policymakers at the Bank of England which has signalled no interest rate hike until well into 2015.

"The low level of household inflation expectations is likely to make people more optimistic about their real income prospects, without the damaging effects that might occur if expectations of sustained deflation were to gain hold."

Britain's consumer price index rose by an annual 1.0 per cent in November, its lowest level in more than 12 years.

REUTERS