UK public inflation expectations for year ahead fall to 4% in May from 4.2% - Citi/YouGov

UK public inflation expectations for year ahead fall to 4% in May from 4.2% - Citi/YouGov

UK public inflation expectations for the year ahead have decreased to 4% in May, as per the latest Citi/YouGov survey. This marks a drop from the previous month's figure of 4.2%. The decline in expectations comes amidst a period of uncertainty surrounding global trade policies and their potential impact on inflation rates.

Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, has advocated for the Fed to maintain current interest rates until the effects of tariffs on inflation become clearer. Kashkari emphasized the need to prioritize long-run inflation expectations and the uncertainty surrounding U.S. trade policies [1]. His stance reflects a cautious approach to interest rate adjustments, particularly in light of the potential for tariffs to increase further and affect economic activity.

The European Central Bank's latest Consumer Expectations Survey also indicates a rise in Eurozone inflation expectations for the next 12 months, reaching 3.1% in April. This increase, by 0.2 percentage points, highlights the ongoing upward trend in inflationary pressures across the region [2].

In the UK, the fall in inflation expectations suggests a shift in consumer sentiment towards a more stable economic outlook. This could influence the Bank of England's monetary policy decisions, as it aims to balance the need to control inflation with supporting economic growth.

The impact of inflation on foreign exchange rates and the price of gold remains a significant factor for investors. High inflation typically leads to an increase in interest rates, which can strengthen a country's currency and attract foreign capital. Conversely, lower inflation can weaken a currency and make gold more attractive as an investment [2].

As the UK economy navigates these changing expectations, investors and financial professionals should closely monitor the evolving inflation landscape and the corresponding policy responses from central banks.

References:
[1] https://www.devdiscourse.com/article/headlines/3436431-kashkari-advocates-steady-interest-rates-amid-tariff-uncertainty
[2] https://www.fxstreet.com/news/ecb-survey-eurozone-consumer-inflation-expectations-stretch-to-31-over-next-12-months-in-april-202505280809