UK Public's Inflation Expectations Decline to 3.7% in November, Boosting December Rate Cut Prospects

Public Expectations See Significant Drop

The British public's expectations for inflation over the next 12 months experienced a notable decline in November, falling to 3.7% from 4.2% in October. This data, released as part of the latest Citi/YouGov survey, marks the lowest level recorded since January and represents the largest single-month decrease since July 2023. Long-term inflation expectations also saw a reduction, moving from 4.2% in October to 3.9% in November.

The survey, conducted by YouGov for the U.S. bank Citi, provides a key indicator of public sentiment regarding future price changes, which can influence wage demands and spending patterns. A sustained fall in these expectations is generally viewed positively by central banks aiming to control inflation.

Implications for Bank of England Monetary Policy

This sharp decline in inflation expectations is widely interpreted as strengthening the case for a potential interest rate cut by the Bank of England (BoE) in December. The BoE's Monetary Policy Committee (MPC) is scheduled to announce its next decision on December 18, 2025.

At its most recent meeting on November 6, 2025, the MPC voted to hold the base interest rate at 4%. However, the decision was a close one, with a 5-4 split, as four members advocated for a 0.25 percentage point cut to 3.75%. This narrow vote had already signaled a growing inclination towards easing monetary policy.

Market analysts are now pricing in a greater than 90% chance of a quarter-point reduction in the base rate next month, reflecting increased confidence that the central bank will act.

Broader Economic Context and Inflation Outlook

The fall in public inflation expectations aligns with other recent data indicating an easing of price pressures in the United Kingdom. The Consumer Price Index (CPI) inflation rate decreased to 3.6% in October 2025, down from 3.8% in September.

The Bank of England's long-term inflation target remains at 2%. While the current rate is still above this target, the trend of declining expectations and actual inflation figures provides the MPC with more flexibility. The Office for Budget Responsibility (OBR) recently revised its inflation outlook, forecasting CPI inflation at 3.5% for 2025 and 2.5% for 2026, with a return to the 2% target anticipated in 2027.

The Bank of England has already implemented several rate cuts this year, bringing the rate to its current 4%, with the latest reduction occurring in August 2025. Should the downward trend in inflation expectations and actual inflation continue, further adjustments to the base rate are likely to be considered by policymakers.