LONDON – Inflation expectations in Britain are well anchored around the Bank of England’s target of 2%, finance minister Rishi Sunak said on Wednesday after data showed inflation broke above the target for the first time in nearly two years.
Sunak said there was no sign that expectations for higher inflation were becoming entrenched as the economy bounces back from its coronavirus lockdowns.
“That’s different to what’s happening in the U.S. so I think actually here, people’s expectation is inflation will remain at target over the medium term, but of course that’s one of the many risks that it’s my job to worry about,” Sunak said in an interview with broadcaster GB News.
Earlier, official data showed Britain’s consumer price index hit 2.1% in May.
Sunak also told GB News there would be would be no return to austerity after his 350 billion pounds ($490 billion) of spending to see Britain’s economy through the COVID-19 pandemic.
However, he said he wanted to protect the country against shocks ahead and not leave Britain’s debt to be paid for by future generations
“(And) that does require a bit of focus and prioritisation,” Sunak said.
Asked if the government will keep its promise to maintain its mechanism for increasing state pensions, which could mean rises that track fast-growing wages, Sunak said the issue would be reviewed in the autumn.