Citi/YouGov survey shows UK inflation expectations dropping near pre-Iran war levels

British consumers are feeling a lot better about inflation, and the timing is raising eyebrows. The latest Citi/YouGov survey shows UK household inflation expectations have fallen sharply, landing near the levels recorded in January 2026 before geopolitical chaos in the Middle East sent energy prices, and nerves, soaring. One-year-ahead inflation expectations dropped to 3.8% in June from 4.7% in May. That’s a nearly full percentage point decline in a single month, the kind of move that gets the Bank of England’s attention fast. The numbers tell a clear story The decline isn’t limited to the short term. Longer-term expectations, covering five years or more, also ticked down from 4.0% in May to 3.9% in June. For context, look at where things stood just a few months ago. In March 2026, short-term inflation expectations spiked to 5.4%, the highest reading since February’s 3.3%. Longer-term expectations hit 4.5% that same month. The culprit was obvious: geopolitical tensions involving Iran had triggered energy price surges that rippled through consumer psychology. July data reinforced the downward trend even further, with one-year expectations falling to 3.4% and longer-term expectation...