Expectations of inflation at record 4.6%

THE public's expectations of the rate of inflation over the next 12 months leapt to a record high of 4.6 per cent last month, from 4.1 per cent in May, according to a YouGov/Citigroup survey.

It is the fourth month in a row that the index has hit a record high.

The Bank of England is concerned that rising inflation could become entrenched in the public mindset and is monitoring price expectations closely.

Consumer price inflation (CPI) rose to 3.3 per cent in May, well above the cental bank's 2 per cent target and the highest rate since comparable records began in 1997. Most economists expect it to reach 4 per cent before the end of the year.

Michael Saunders, UK economist at Citigroup, said: "The further rise in inflation expectations for the year ahead is bound to alarm the monetary policy committee."