Consumers expect inflation to remain high in 2012
By UK CreditCards.com
Britons expect inflation to remain high over the next 12 months, according to research from the Bank of England.
The results of the latest quarterly survey of public attitudes towards inflation were published Thursday and show that people have little hope of inflation dropping back to desirable levels.
The poll also revealed that two-fifths of consumers expect interest rates to rise over the next 12 months, which could affect the cost of borrowing in the UK.
Britons expect 4.1% inflation in 2012
Consumers are preparing themselves for inflation to remain high over the coming months, with many expecting prices to rise by 4.1% in 2012, according to the Bank of England/GfK NOP Inflation Attitudes Survey.
The poll questioned 1,835 people, aged 16 and over, and found that respondents still expect inflation to be well above the 2% target in 2013. The median response when people were asked about the rate of inflation in 2013 was 3.4%, and 3.5% in five years' time.
Anna Smee, director of strategy consulting firm Hundred, told the FT Advisor: "At a time of rising unemployment and negligible wage inflation, many people will be concerned by the prospect of inflation remaining above 4%. Most people are feeling the pinch as the cost of day-to-day expenses such as the supermarket shop rise faster than salary levels."
Interest rates expected to rise
The survey also revealed that two-fifths (39%) of people expect interest rates to rise over the next 12 months, with just 6% anticipating a fall. In terms of the economy, 15% think an interest rate rise would be beneficial. A greater proportion (22%) believe an interest rate rise would be best for them personally, while 28% think it would be better for them if interest rates dropped.
These differing attitudes towards interest rates almost certainly reflect people's individual circumstances.
"For those with high levels of borrowing in the form of mortgages or credit cards, low interest rates represent a key support and the prospect of rate rises is a worry," pointed out Ms Smee. " Savers, on the other hand, will be hoping interest rates rise quickly to protect their wealth."See related: Bankers expect credit problems to worsen; Study: Worst consequences of recession 'still to come'
Published: 16 December 2011
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