LONDON (Reuters) - The British public's expectations for inflation in future years receded this month to the lowest level since January, a survey showed on Monday in good news for Bank of England officials who fear price pressures are becoming embedded.
U.S. bank Citi and pollsters YouGov (LON:YOU) said the expectations for inflation in five to 10 years fell to 4.0% in June from 4.2% in May, a move Citi described as encouraging.
Inflation expectations for 12 months time were steady at 6.1%, the survey showed.
BoE rate-setters are watching surveys for signs that high inflation - which hit a 40-year record of 9.1% last month - is becoming entrenched in the psychology of the British public, which would make it harder to bring inflation back to the BoE's 2% target.
Citi economist Benjamin Nabarro said inflation expectations were still elevated.
"However, we see little in today's data that should provide a further impetus for an outsized 50 basis point move (in interest rates) in August," Nabarro added.
Financial markets show a roughly 73% chance that the BoE will raise its Bank Rate to 1.75% from 1.25% at its next policy decision on Aug. 4.