June 26, 2018 / 1:47 PM / 5 months ago

UK inflation expectations rise to joint-highest level since 2013

Andrew Kershman poses for a photograph filling his car with fuel in Hackney, east London, January 31, 2016. The global oil price is hovering at about $30 U.S. dollars a barrel. REUTERS/Paul Hackett

LONDON (Reuters) - The British public’s expectations for inflation over the next 5-10 years have risen to their joint-highest level since December 2013, and shorter-term price expectations are also on the rise, a monthly Citigroup/YouGov survey showed on Tuesday.

Citi said Britons’ longer-term inflation expectations rose to 3.3 percent this month from 3.2 percent in May, matching a four-year high struck in December 2017.

Expectations for the year ahead rose for a second consecutive month, increasing to 2.6 percent from May’s 2.5 percent, against a backdrop of increasing fuel prices.

“The rise in the oil price has now led to a rebound in households’ inflation expectations. So far, this is not out of the ordinary, but the Bank of England may have a watchful eye on potential second-round effects e.g. on wage settlements, from higher oil prices,” Citi economists Christian Schulz and Ann O’Kelly said in a note to clients.

The data is based on a survey of 2,006 British adults carried out on June 20 and June 21 by polling company YouGov.

Reporting by David Milliken, editing by Andy Bruce

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