“Sorry, I don’t know” dominates Britons’ outlook for UK economy

January 29, 2015
Lots of inflation for this guy

Lots of inflation for this guy

Britons are becoming no clearer about the outlook for their economy, if the latest Citi/YouGov survey of inflation expectations is anything to go by.

While main news was that expectations for British inflation over the next 12 months hit a six-year low, the monthly poll also showed uncertainty about inflation is rising fast.

Some 17 percent of respondents asked about the long-term inflation outlook responded “don’t know” – the largest share since late 2011 and last higher in 2006.

There was a similar lack of certainty in December’s quarterly Inflation Attitudes survey from the Bank of England, which showed there were more “don’t knows” about the inflation outlook for the next 12 months than  at any time since 2008.

While BoE Governor Mark Carney has said the central bank’s message on interest rates is being “increasingly understood”, there were more “no idea” responses on the outlook for interest rates than since the BoE’s survey started in 1999.

But if consumer confidence is high and retail sales are rocketing, why should it matter that increasing numbers of Britons aren’t sure how the economy is going to pan out?

Michael Saunders, economist at Citi, said it was wise to keep tabs on the number of “don’t knows”.

“To be sure, this remains a relatively modest group of the population, but is worth keeping an eye on. Inflation uncertainty could, if it becomes widespread, translate into uncertainty over real incomes and the general economy.”

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