UK Inflation Expectations Ease in December, Further Softening Seen Ahead

Inflation expectations among the British public edged lower in December and are expected to continue easing in the months ahead, according to analysts at a major U.S. bank.

A monthly consumer survey showed that expectations for price growth over the next 12 months declined to 3.6% in December, down from 3.7% in November. This marked the lowest reading since January 2025.

Longer-term inflation expectations also weakened, slipping to 3.8% from 3.9%.

Despite the recent moderation in expectations, Britain continued to record the highest inflation rate among the Group of Seven advanced economies, with consumer price inflation running at 3.2% in November.

Bank of England Governor Andrew Bailey has said he expects the recent slowdown in price growth to persist, with inflation projected to return to the central bank’s 2% target around April or May.

In commentary released on Monday, analysts said the latest survey results may not yet be strong enough to fully ease concerns among some Bank of England policymakers that inflation could remain uncomfortably high. However, they added that they expect inflation expectations to continue softening as actual inflation declines during the first half of 2026.

The survey was conducted in late December, based on responses from just over 2,000 adults.