UK consumers expect inflation to cool below 4% in coming year - BoE

UK consumers expect inflation to ebb further than previously thought, according to results from a survey by the Bank of England.

Median expectations for the rate of inflation over the coming year were 3.9%, according to the quarterly latest inflation attitudes survey, down from 4.8% in November 2022.

‘Asked about expected inflation in the twelve months after that, respondents gave a median answer of 3.0%, down from 3.4% in November 2022,’ the BoE said.

Expectations for the inflation rate in five years time was also 3.0%, but down from the 3.3% prediction in the November survey.

When asked about the current rate of inflation, survey respondents predict it to be at 9.2%, unchanged from the November survey figure.

According to the most recent reading from the Office for National Statistics, the UK annual inflation rate was 10.1% in January.

The BoE added: ‘Asked what would be ’best for the economy’ – higher interest rates, lower rates or no change – 16% thought rates should ’go up’, compared to 20% in November 2022. 33% of respondents thought that interest rates should ’go down’, compared to 30% in November 2022. 27% thought interest rates should ’stay where they are’, up from 25% in November 2022.

‘When asked what would be ’best for you personally’, 27% of respondents said it would be better for them if interest rates were to ’go up’, in line with 27% in November 2022. 30% of respondents said it would be better for them if interest rates were to ’go down’, in line with 30% in November 2022.’

Satisfaction towards the Bank of England’s work to control inflation and set interest rates picked up to minus 4%, from minus 12% in November.

The survey was conducted by Ipsos on behalf of the BoE. Ipsos interviewed two samples of people aged 16-75 across the UK. The first group was surveyed between February 3 and 6 and the second between February 17 and 19.

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