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LONDON, Dec 9 (Reuters) – British public expectations for inflation over the next one to two years rose to their joint-highest level in nearly a decade and satisfaction with the Bank of England fell, according to a quarterly BoE survey.
Central bankers closely watch surveys of inflation expectations to determine whether people and businesses expect to stick to above-target inflation, influencing wage-bargaining and price strategies — though not all officials are convinced the data provide a meaningful guide to future behavior.
Friday’s survey showed public expectations for inflation over the next one to two years rose to 3.4% in November from 3.2% in August, matching May’s reading which was the highest since November 2013.
British consumer price inflation hit a 41-year high of 11.1% in October, more than five times the BoE’s 2% target.
The public’s net satisfaction with the BoE’s work to control inflation fell to -12, the lowest since the survey began in 1999, from -7 in August.
However, not all survey measures were so negative.
Inflation expectations over the five-year period rose to 3.3% from 3.1% in November, but were below May’s two-and-a-half-year peak of 3.5% and no higher than their long-term average of 3.2%.
Expectations for inflation over the next year fell to 4.8% from August’s record-high 4.9%.
In September, Britain’s government announced measures to limit future increases in household energy bills.
Some other measures of inflation expectations show a greater decline in expectations than the BoE survey. A survey conducted by Citi and YouGov on November 22 and November 23 showed that inflation expectations for the five- to 10-year period fell to 3.9% in November from a peak of 4.8% in August.
The BoE survey took place from November 4 to November 7, after the BoE raised rates by three-quarters of a percentage point to 3%. The BoE is likely to raise rates by half a point to 3.5% next week, according to a Reuters poll of economists.
Reporting by David Milliken; Editing by Kate Holton
Our Standards: The Thomson Reuters Trust Principles.
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