UK households’ inflation expectations at highest in six years, survey reveals
UK households are expecting inflation to rise over the next 12 months as the possibility of a no-deal Brexit increases.
The public’s expectations for inflation are at their highest level since 2013, according to a survey from US bank Citi and pollsters YouGov, released on Friday.
Read more: UK consumer confidence staggers in face of no-deal Brexit
The results revealed that the public are on average anticipating inflation to rise to 3.2 per cent over the coming year, up from 2.9 per cent in July.
It comes as the likelihood of the UK leaving the EU on 31 October increased this week, with Prime Minister Boris Johnson proroguing Parliament.
While the ongoing trade war between the US and China has also caused fears of a global economic slowdown, increasing the risk of a UK recession.
Read more: Eurozone inflation falls well below ECB target in July
“Such high levels have previously usually been associated with high energy prices,” economists at Citi said in a research note.
“However, in the absence of those at the moment, the increase could be driven by rising chances of a rupture with the EU on Oct. 31, which could lead to higher consumer prices via tariffs, supply disruptions and weaker sterling.