The M&G YouGov Inflation Expectations Survey – Q4 2014

Today we launch the next edition of M&G YouGov Inflation Expectations Survey which polled over 8,200 consumers across the UK, Europe and Asia.

The Q4 report reveals that consumers’ short-term inflation expectations continue to moderate across most regions, although they remain well above current inflation levels. Long-term expectations remain resilient despite this year’s low inflation environment.

Short-term inflation expectations in the UK fell to 2% in November, having been 2.2% in August. The latest figure is the lowest in the last three quarters since a matching 2.0% in February 2014. In Europe, short-term inflation expectations fell in Spain, Austria and Switzerland, remained stable in Italy and Germany at 2%, and increased in France (from 1% to 1.5%).

2014-12 Infl Surrv blog AG1

Over a 5-year period, expectations remain unchanged at 3%, a sign that consumers still lack confidence in the Bank of England’s ability to achieve price stability.  Similarly, in Europe, inflation expectations have progressively fallen through 2013/2014 with unemployment, fiscal austerity and an overvalued currency weighing on domestic consumption and exports. However, long term expectations remain firmly above the European Central Bank’s 2% inflation target in all surveyed countries.

2014-12 Infl Surrv blog AG2

In Asia, the gauge for short-term inflation falls to a record low of 3% in Singapore. However, over a five-year period, expectations have risen back to 5%, the average reading since the start of the survey. The outlook for inflation is concerning in Hong Kong where one-year expectations rise from 4% to 4.7% and the long-term gauge remains unchanged at 5%.

The findings and data from our Q4 survey is available in our latest report here or via @inflationsurvey on Twitter.

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

Ana Gil

Job Title: Investment Director

Specialist Subjects: High yield credit, inflation

Likes: Tennis, travel, tidiness, sushi

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