Nearly half (46 per cent) of pension professionals believe that inflation will remain at 5 per cent or more for the next three years, ‘sufficiently above’ the Bank of England (BoE) target of 2 per cent, according to a poll.

The poll, which was conducted at the PLSA Investment Conference 2022, also found that 51 per cent of session attendees believed that inflation would remain ahead of the 2 per cent target but move back to 2-4 per cent.

Just 4 per cent felt that inflation would drop sharply and be back at or below the BoE 2 per cent target level within three years.

Commenting on the poll results, British Coal Superannuation Scheme and Universities Superannuation Scheme Trustee Board chair, Dame Kate Barker, said: “I think inflation is going to be pretty volatile over the next two to three years, but by the end of that period I might be edging towards the 4 per cent camp.”

Schroders chief economist, Keith Wade, added: “I’m of a very similar view. I’m quite surprised as how pessimistic people are because it means that 46 per cent feel that the Bank of England is going significantly miss its target over a three-year period. I think that’s quite pessimistic.”

However, National Institute of Economic and Social Research research fellow, Paul Mortimer-Lee, said he believed that attendees were right to be pessimistic.

“I think it is going to miss its target because it’s going to be faced with a recession, and when it gets a recession it’s not going to tighten sufficiently to get rid of the inflation,” he said.

“We know that in the US and UK over recent years, inflation is very unresponsive to spare capacity. So, once you catch inflation, it’s difficult to get rid of, and the slack policy we’ve had for years and years presents enough fuel for this to be a persistent problem, not a temporary one.”

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