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UK public inflation expectations rise unexpectedly, Citi/YouGov survey shows

FILE PHOTO: A person looks at food goods in a shop in London

LONDON (Reuters) - The British public's expectations for inflation over the coming year and five to 10 years ahead rose unexpectedly in February, U.S. bank Citi said after publishing a monthly survey conducted by market research company YouGov.

The Bank of England closely watches surveys of inflation expectations as it believes they influence businesses' pricing decisions and the extent to which workers push for higher pay.

British consumer price inflation hit a 41-year high of 11.1% in October and is still in double digits, but last month the BoE forecast it would drop below 4% by the end of this year.

However, Citi said public expectations for inflation in 12 months time rose to 5.6% in February from 5.4% in January, while expectations for the long term rose to 3.8% from 3.5%.

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Long term expectations had fallen during the previous five months.

"Today's unexpected increase re-affirms continued upside risks that have stalked UK inflation expectations in recent months," Citi economist Ben Nabarro said, adding that food shortages had probably boosted perceptions of inflation.

Snow and hail storms in Spain and Morocco have disrupted the supply of salad vegetables to British supermarkets, leading to empty shelves and rationing by retailers.

Market research company Kantar reported on Tuesday that grocery prices in Britain in the four weeks to Feb. 19 were a record 17.1% higher than a year earlier.

YouGov surveyed 2,021 adults on Feb. 22 and Feb. 23.

(Reporting by David Milliken; Editing by Mark Porter and Frances Kerry)