Britain is facing renewed inflation pressure after public expectations for future price rises increased sharply, adding another challenge for the UK economy and the Bank of England.

A new Citi/YouGov survey found that expectations for UK inflation over the next 12 months increased to 3.9% in August, up from 3.4% in July. Longer-term expectations also climbed to 4.1%, their highest level since April.

The increase comes as global energy markets remain volatile, with higher energy costs threatening to feed into household bills and business expenses. The Bank of England has been closely monitoring whether temporary energy-price pressures could become embedded in wages and wider price-setting behaviour.

The central bank kept Bank Rate at 3.75% in July, although three members of its Monetary Policy Committee wanted a 0.25 percentage-point increase. The Bank has warned that inflation could rise later in 2026 as higher energy prices work through the economy.

For households and businesses, the biggest concern is that persistent inflation expectations could make borrowing costs remain higher for longer.

The latest figures add uncertainty to Britain's economic outlook ahead of the government's autumn Budget and the Bank of England's next major policy decisions.