Inflation expectations have fallen noticeably, BoE survey shows

Date: Friday 07 Sep 2012

According to the results of the Bank of England’s quarterly survey the public’s inflation expectations have fallen quite sharply since last May.

Thus, when asked to give the current rate of inflation, respondents gave a median answer of 4.1%, compared with 4.7% in May.

Similarly, the median expectation for the rate of inflation over the coming year has fallen to 3.2%, compared with 3.7% the last time around.

Asked about expected inflation in the twelve months after that, respondents gave a median answer of 2.8%, compared with 3.4% in May.

Looking out to the longer term, say in five years’ time, respondents gave a median answer of 3.1%, compared with 3.6% in May.

Interestingly, given the recent debate over the effect which the Bank’s policy is having on pensioners’ incomes, when asked what would be ‘best for you personally’, 23% of respondents said interest rates should ‘go up’, compared with 25% in May. 28% of respondents said it would be better for them if interest rates were to ‘go down’, compared with 26% in May.

Nevertheless, the net satisfaction balance with the Bank’s efficacy in setting rates to control inflation –the proportion of those canvassed who said they were satisfied minus the proportion who answered that they are not– was +6%, compared with +11% in May.

AB

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