British households’ expectations for inflation over the coming year rose in September, a survey showed, in a worrying sign for the Bank of England ahead of its next rates decision.

Higher inflation expectations can become self-fulfilling if workers demand bigger pay rises and businesses raise prices, making it harder for the central bank to bring inflation down.

The Bank of England watches measures of expected inflation closely when setting interest rates, and the rise will feed into its thinking at upcoming meetings.

The data comes amid a mixed economic picture, with growth sluggish but price pressures proving sticky in parts of the economy. Services inflation in particular has remained stubborn, keeping policymakers on edge.

Economists said the figures underlined why policymakers remain cautious about cutting borrowing costs. Markets will now look to official inflation data and the Bank’s next decision for clues on the path of interest rates in the months ahead.