Inflation expectations gather pace in May - BoE

Customers shop for groceries in a supermarket in London October 18, 2011.

LONDON (Reuters) - Britons expect prices to climb at a faster rate over the coming year than three months ago, a Bank of England survey showed on Friday, raising concerns that the public may be getting too used to high inflation.

The Bank's May inflation attitudes survey showed that the public expect inflation of 3.7 percent over the next 12 months, up from an expected 3.5 percent in February, and the highest since November.

The pick up in expectations comes despite a recent slowdown in price pressures, which pushed consumer price inflation down to a 2-year low of 3.0 percent in April.

This may set alarm bells ringing with policymakers, who on Thursday decided that signs of an economic slowdown were not enough to justify restarting their gilt purchase scheme.

It may also spark concerns that Britons will start demanding higher wages to compensate for the rising cost of living.

Inflation has been above the Bank's 2 percent target for almost 2-1/2 years, and the central bank reckons it will stay above target until late next year.

Respondents in the Bank's survey said they expected inflation in two years time be 3.4 percent, up from 2.9 percent in February.

In five years time, inflation is seen hitting 3.6 percent - the highest reading on this question since its inclusion in the survey 3 years ago - up from 3.2 percent in February.

The acceleration in inflation expectations coincided with a sharp drop in Britons' satisfaction with the way the Bank does its job. Only a net 11 percent of respondents said they were satisfied with the Bank's ability to control inflation, down from 20 percent in February and one of the lowest readings in the survey's history.

The central bank this week opted not to expand its 325 billion pound quantitative easing programme, in part because of concerns about sticky inflation, and that stagnant growth since the financial crisis may have done permanent damage to Britain's productive capacity.

The survey was carried out by polling company GfK NOP between May 17 and May 22, and interviewed 1,966 people. (Reporting by Fiona Shaikh and David Milliken)