A survey recently conducted by the Bank of England indicates that Brits feel that interest rates are not controlling inflation in an effective manner.
The number of personal and business bank account holders in the UK who feel that the Bank was doing a good job in controlling inflation through the judicial use of interest rates was only 9 per cent in the most recent survey. This is a 7 per cent drop from the 16 per cent who felt the BoE was taking the proper steps this past August, when the survey was last conducted, and the new figure is the lowest it has ever been since November of 1999, when the survey first began.
The November survey indicates that consumers are expecting a 4.1 per cent increase in the cost of consumer goods over the course of the next 12 months. This is actually a slight decline from August’s expectations, when respondents predicted a 4.2 per cent rate of inflation.
As for longer-term inflation rates, survey respondents expect a 3.4 per cent rate in 2013. In five years’ time, the majority expected a slight increase to 3.5 per cent inflation.
Only six per cent of survey respondents expected inflation to fall over the next 12 months, based on the expectation that the Bank of England will keep the base rate low in order to encourage low rates for business loans. Meanwhile, the common perception of survey respondents was that inflation was at 5 per cent or higher, despite the fact that last month saw the cost of living decline slightly to 4.8 per cent.