Bank of England: Public expect inflation to remain higher over next 12 months

The public believe inflation is likely to be higher next year than previous expectations, according to a new survey by the Bank of England.

The central bank found that people believe inflation will be around 3.2% over the next 12 months, compared to 2.7% recorded by the same survey in August.

Supply chain disruptions, high energy prices and worker shortages have all pushed up inflation in recent months and led to price rises in stores and for services.

The Bank of England’s Inflation Attitudes Survey also found the public believe inflation will continue to remain higher than previously thought in 2023 and beyond.

Asked about expected inflation in 2023, respondents said they expect it to be around 2.4%, up from predictions of 2.2% in August.

Longer term, respondents said they expect inflation in five years’ time to be around 3.1%. The Bank’s role in setting interest rates is to maintain inflation at between 2% and 3%.

About 37% of respondents said they thought the target was “about right” – a fall from 42% giving the same response in August.

More people said they had seen interest rates on products like mortgages and loans rise in the past 12 months, despite the Bank keeping rates at all-time record lows.

The Bank’s monetary policy committee is set to announce whether interest rates will rise next Thursday.

It remains unclear whether rate rises will be announced, but Governor Andrew Bailey has said they will need to come up soon to manage high inflation, which hit 4.2% last month.

About 60% of respondents said they expect an interest rate rise in the next 12 months, with just 21% saying they expect them to remain the same.

Approval rates for the Bank on whether it was “doing its job to set interest rates to control inflation” fell from 18% in August to just 14% in November.