Public inflation expectations for the next 12 months slumped in January to their lowest level since April 2010, a monthly survey from polling company YouGov showed on Tuesday.
The survey, carried out on behalf of Citi, showed inflation expectations fell to 2.6 percent in January from 3.1 percent in December, the fourth-biggest drop since the survey began in 2005.
Longer-term inflation expectations also fell, with the estimates for annual inflation over the next 5-10 years dropping to 3.2 percent from December's reading of 3.4 percent - well below the peak of 4.1 percent hit in June.
The drop in inflation expectations, coupled with the weak economy, pave the way for a further major increase in QE at the February meeting. We continue to expect that QE will be expanded well beyond market expectations this year, said Citi economist Michael Saunders.
Headline consumer price inflation fell sharply in December to 4.2 percent from 4.8 percent in November, having hit a three year high of 5.2 percent in September.
The Bank forecasts that inflation will fall below its 2 percent target by the end of 2012.
(Reporting by David Milliken)