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LONDON Dec 21 Britons' long-term expectations
for inflation hit a more than two-year high this month, as
consumers braced for a bout of higher prices after the pound's
post-Brexit vote fall, a survey showed on Wednesday.
The British public expected inflation in the next five to 10
years will reach 3 percent, the highest forecast since September
2014 and up from a November reading of 2.8 percent, Citi and
pollster YouGov said.
In the shorter term, respondents to the survey predicted
inflation in 12 months' time would rise to 2.43 percent from an
earlier forecast of 2.36 percent.
So far, the British economy has weathered the initial Brexit
shock better than many expected. But a rise in inflation next
year is likely to strain the spending power of households who
have driven the recovery in the economy since the financial
crisis of 2007-09.
The Citi/YouGov survey chimed with other gauges of inflation
expectations from businesses and financial markets since June's
Brexit vote, which prompted a sharp fall in the value of
Citi said the British public's expectations for inflation
were returning to normal level after hitting an all-time low
after the Brexit referendum.
"Due to uncertainty amidst the beginning Brexit process, we
do not expect this to trigger BoE policy 'normalisation',
however, at least until after the Article 50 process ... is
completed in 2019," said Citi economists Christian Schulz and
On Tuesday Prime Minister Theresa May on Tuesday repeated
that she intends to trigger Article 50 - the formal divorce
procedure of leaving the European Union - by the end of March.
British consumer price inflation stood at 1.2 percent in
November, the highest level since October 2014, official data
showed last week.
YouGov surveyed 2,099 people between Dec. 19 and Dec. 20.
(Reporting by Kate Holton and Andy Bruce; editing by Sarah
Young and Toby Chopra)