Bloomberg News

U.K. November Inflation Expectations Ease, Bank of England Says

December 15, 2011

Dec. 15 (Bloomberg) -- Britons’ inflation expectations fell last month and their satisfaction with the Bank of England deteriorated as price growth remained at more than twice policy makers’ 2 percent target.

U.K. consumers questioned in November expected prices to increase 4.1 percent over the next year, the Bank of England said in a quarterly survey published in London today. That compares with a reading of 4.2 percent in August. A measure of satisfaction with the Bank of England fell to a record low.

Inflation, which reached 5.2 percent in September, eased to 4.8 percent last month, and Bank of England Chief Economist Spencer Dale said that it will slow “sharply” early next year as the impact of a tax increase this year drops out. He also said policy makers have scope to expand their bond-purchase program beyond the current 275 billion-pound ($426 billion) target if the debt crisis in Europe deepens.

Consumers’ satisfaction with the Bank of England fell to the lowest since November 1999, when the survey was first published, according to today’s report. Asked how well they think the bank is setting interest rates to control inflation, 33 percent said they were satisfied and 25 percent were dissatisfied. The net balance of 9 was down from 16 in August.

Asked about inflation in about five years’ time, the median answer was 3.5 percent in November, unchanged from August. Expectations for inflation in the 12 months starting November 2012 fell to 3.4 percent from 3.5 percent.

Asked to give the current rate of inflation, respondents gave a median answer of 5 percent. The survey of 1,853 people by GfK NOP was conducted between Nov. 3 and Nov. 8.

--Editor: Fergal O’Brien

UKBFFTIN Index

To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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