The British public's expectations for inflation edged down in December and are likely to keep on weakening in the coming months, U.S. bank Citi said on Monday (Jan 12).
A monthly survey conducted by Citi and polling firm YouGov showed expectations for price growth in the 12 months ahead fell to 3.6 per cent in December from 3.7 per cent in November, their lowest since January 2025.
Britain had the highest inflation rate among the Group of Seven large, advanced economies at 3.2 per cent in November.
However, Bank of England Governor Andrew Bailey has said he expects a recent weaning of price growth will continue and inflation will hit the BoE's 2 per cent target in April or May.
In their note, Citi analysts said they thought the latest expectations survey might not be sufficiently convincing to dispel the worries among some BoE policymakers about the risk of inflation remaining stuck too high.
"However, we do expect to see these data continue to soften as realised inflation comes down over the H1 2026," they said.
The YouGov poll was based on a sample of 2,056 adults on December 22 and December 23.
Meanwhile, according to the latest figures from the British Retail Consortium (BRC), food inflation climbed to 3.3 per cent year on year in December, compared with 3.0 per cent the previous month.
Fresh food inflation rose to 3.8 per cent, up from 3.6 per cent in November, while ambient food inflation increased to 2.5 per cent, compared with 2.4 per cent previously. Both fresh and ambient categories, however, remained slightly below their respective three-month averages.
Covering the period 1–7 December 2025, overall shop price inflation rose to 0.7 per cent year on year, up from 0.6 per cent in November and in line with the three-month average of 0.7 per cent.
BRC expert claimed that while falling energy prices and improved crop supply should help ease some cost pressures, inflation is likely to remain “sticky” in 2026 due to rising public policy costs and regulation.
While inflation has peaked, weak shopper sentiment is expected to persist into 2026, with consumers continuing to seek out lower prices and promotional offers, they added.