UK households are showing more confidence that price pressures will ease, according to a Citi/YouGov survey that points to inflation expectations moving back toward levels seen before the recent Iran-related conflict. The shift suggests consumers are less worried about future price rises than they were during the latest energy-driven market tension.
That change could be important for the Bank of England. Lower inflation expectations can reduce pressure on policymakers when they weigh interest-rate decisions, because public expectations often influence wage demands, spending behavior and broader price trends.
The improvement in sentiment comes even as global energy costs have been rising, a reminder that the inflation outlook is still vulnerable to external shocks. If energy markets remain volatile, that could feed back into household bills and business costs, complicating the path for UK inflation.
For now, the survey points to a more stable mood among British consumers and offers the central bank some breathing room. Still, any renewed jump in energy prices could quickly test whether this decline in inflation expectations can be sustained.
