Inflation expectations at record high
People's expectations of the rate of inflation over the next 12 months leapt to a record high of 4.6 percent in June from 4.1 percent in May, according to a YouGov/Citigroup survey on Tuesday.
BAE posts rise in underlying profitThis 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 rose to 3.3 percent in May, well above the Bank's 2 percent target and the highest rate since comparable records began in 1997. Most economists expect it to reach 4 percent before the end of the year.
Bank policymakers may take some comfort, however, from signs that long-term inflation expectations have remained relatively stable since the start of the year.
Asked what would happen to the price of goods and services over the next five to 10 years, the median expectation was for a rise of 3.8 percent, down from 3.9 percent in May.
"The further rise in inflation expectations for the year ahead is bound to alarm the Monetary Policy Committee," said Michael Saunders, UK economist at Citigroup.
"Some may argue that the erosion of the credibility of the inflation target does not matter as long as pay growth does not pick up. In our view that is too complacent."
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