According to Citi and YouGov's inflation expectations index for May, the public believes prices will climb at about 3.5pc over the longer term compared with the Bank's 2pc target. Inflation is currently 4.5pc. "Long-term inflation expectations fell to about 3pc from late-2008 to mid-2010 but, with continued large inflation overshoots versus the target, now seem to have returned to the pre-recession norm of about 3.5pc," said Michael Saunders, Citi's UK economist. (full story)