Key facts
- Year-ahead inflation expectations fell to 3.2% in August, down from 4.0% in May.
- Two-year ahead inflation expectations fell to 2.9% in August, down from 3.5% in May.
- Five-year ahead inflation expectations fell to 3.2% in August, down from 3.9% in May.
- Both survey providers reported current inflation at 5.0% in May.
- The Bank of England cautioned that changes in survey providers make trend analysis difficult.
The Bank of England reported a significant decrease in public expectations for future inflation in August, attributing the shift partly to a change in the company conducting its surveys. Policymakers consider these expectations a key factor in assessing the risk of persistent inflation.
The central bank stated that comparisons between the May results, conducted by Ipsos, and the August results, from Savanta, should be treated with caution. The August data from Savanta showed year-ahead inflation expectations falling to 3.2%, two-year ahead expectations at 2.9%, and five-year ahead expectations at 3.2%.
In May, Ipsos reported year-ahead expectations at 4.0%, two-year ahead at 3.5%, and five-year ahead at 3.9%. However, the Bank of England also commissioned Savanta to conduct a May survey, which yielded results approximately half a percentage point lower than Ipsos for the same time horizons: 3.6% year-ahead, 3.1% two-year ahead, and 3.3% five-year ahead.
Both polling firms agreed on the public's perception of current inflation at 5.0% in May. The Bank of England awarded the contract to Savanta following a competitive retendering process.