The first sign that persistently high inflation in the U.K. may be easing have been seen the latest survey of Briton’s inflation expectations as well as data wholesale prices, according to Financial Times. On Friday, the Office for National Statistics reported that the price of goods leaving factory gates increased by 0.2% in May from the previous month, which is the smallest monthly increase since August 2010. The modest increase brought inflation to 5.3% year-over-year from 5.5% in April. Input prices for factories were down 2.0% in May, which marks the biggest monthly drop since April 2009.
Meanwhile, the Bank of England reported that its quarterly survey of inflation expectations showed that Briton’s expect inflation of 3.9% in one year, which is down form 4.0% in the February survey. The reading is still well above the official 2% target, but the survey showed longer-term expectations fell by even more. The two-year inflation projection was 3.2% rather than 3.4% previously, while the five-year figure was down by the same amount to 3.3% in the latest survey. Simon Hayes of Barclays Capital said that the lower long-term expectations “suggest the general public accepts the Monetary Policy Committee’s assessment that the current high rates of inflation will not persist.”