Consumer inflation expectations rise to highest since 2014

Public expectations of a rise in inflation in the coming year has peaked to its highest level since 2014, with more people also predicting the Bank of England will raise interest rates.

According to the Bank of England’s November survey of public attitudes to inflation, consumers expect inflation over the coming year to rise to 2.8%, up from 2.2% in August.

Expected inflation in the 12 months after that gave a median answer of 2.5%, compared with 2.2% in August.

That figure jumps in the longer term, such as in five years’ time, to 3.1%, compared to 3% in August.

A total of 41% of respondents expect the Bank of England’s record low base rate of 0.25% to rise over the next year. That’s almost double the 21% who thought interest rates would rise in August.

Thirty six per cent thought it would be best for the economy to have interest rates ‘stay where they are’, followed by 21% that thought rates should rise and 16% who want them to fall.

The rapid decline in the value of sterling since the Brexit vote has pushed up import prices. The BoE forecasts that inflation will surge above its 2% goal next year.