2012.06.08 10:36:08 UK Inflation Expectations Rise In May - BOE Poll

By Alex Brittain LONDON--Britons expect the annual rate of inflation to rise in the coming years and stay firmly above the Bank of England's target rate, a survey showed Friday. The BOE's latest quarterly survey, conducted by polling firm GfK NOP, showed the public expects inflation in the coming year of 3.7%, up from 3.5% in the previous survey. That is much higher than the current rate of consumer price inflation, last measured at 3.0% in April, and far above the BOE target of 2.0%. Concerns over inflation were likely a major factor in the BOE Monetary Policy Committee's decision Thursday to keep its key interest rate and its stimulus program of asset purchases on hold for another month, despite the U.K. falling into recession in the first quarter. The BOE monitors inflation expectations for signs that people are getting accustomed to high levels of price growth and may ask for wage increases to compensate--a development that could push actual inflation higher. Official data on wage growth has been muted, however. Friday's survey showed inflation in around five years' time is expected to be 3.6%--the highest such response since the question was first asked in 2009. But the public's perception of the current inflation rate was 4.7%, also much higher than the actual measured rate of inflation. That suggests people are more aware of inflation measures that include mortgage costs and other prices not included in the consumer price index. Write to Alex Brittain at alex.brittain@dowjones.com (END) Dow Jones Newswires June 08, 2012 04:36 ET (08:36 GMT)