UK inflation expectations fell sharply in August after the Bank of England switched the company conducting its quarterly survey, although the central bank warned that the figures should not be treated as a straightforward change in public sentiment.
Research by the new provider, Savanta, showed median expectations for inflation over the next year declining to 3.2 per cent, from 4 per cent in the previous figures produced by Ipsos.
Expectations for inflation over the following two years fell to 2.9 per cent, while the five-year measure dropped to 3.2 per cent. Ipsos had recorded figures of 3.5 per cent and 3.9 per cent respectively in its May survey. ([investing.com](https://www.investing.com/news/economy-news/uk-inflation-expectations-fall-after-bank-of-england-changes-survey-provider-4897399))
The Bank said comparisons between the May and August results should be approached with caution because the change in polling companies had affected the results, alongside any genuine movement in expectations.
To assess the difference, the Bank commissioned Savanta to conduct a second survey using the May timeframe. Its results were around half a percentage point lower than those recorded by Ipsos: 3.6 per cent for one year ahead, 3.1 per cent for two years and 3.3 per cent for five years.
Both firms put the public’s estimate of current inflation at 5 per cent in May, suggesting that the divergence was concentrated in expectations about future price rises rather than perceptions of the present rate.
The Bank said Savanta had been appointed after a competitive retendering process. Inflation expectations are closely monitored by policymakers because they can influence wage demands, business pricing decisions and the risk that inflation remains above the Bank’s 2 per cent target. ([investing.com](https://www.investing.com/news/economy-news/uk-inflation-expectations-fall-after-bank-of-england-changes-survey-provider-4897399))
