Britons expect higher inflation in 2011
By Christina Fincher |
March 18, 2011, Friday
|
Print Edition
Print Edition
BRITONS expect a higher rate of inflation over the coming year than at any time since August 2008, suggesting stubborn price rises are becoming embedded in consumer psychology, a Bank of England survey showed yesterday.
The BoE's February inflation attitudes survey showed Britons' median guess at where inflation would be over the next 12 months was 4.0 percent, up from 3.9 percent in November and twice the Bank of England's target.
Respondents expected inflation in two years' time to be 3.4 percent and in five years to be 3.5 percent - the highest forecasts for these measures since the BoE first asked about them in February 2009.
Inflation has been above the BoE's 2 percent target for most of the past three years and hit a two-year high of 4 percent in January.
The central bank has blamed one-off price shocks for the overshoot but is concerned a prolonged period of above-target inflation could lead to a vicious cycle of price rises and higher wage demands.
In February, three of the BoE's nine monetary policy makers voted to raise interest rates, concerned that consumers might otherwise start to lose faith in the bank's ability to bring inflation back down.
UK interest rates have stood at 0.5 percent since March 2009, but investors expect them to rise before the end of the year, most likely by August.
The survey was based on interviews with nearly 4,000 people.
The BoE's February inflation attitudes survey showed Britons' median guess at where inflation would be over the next 12 months was 4.0 percent, up from 3.9 percent in November and twice the Bank of England's target.
Respondents expected inflation in two years' time to be 3.4 percent and in five years to be 3.5 percent - the highest forecasts for these measures since the BoE first asked about them in February 2009.
Inflation has been above the BoE's 2 percent target for most of the past three years and hit a two-year high of 4 percent in January.
The central bank has blamed one-off price shocks for the overshoot but is concerned a prolonged period of above-target inflation could lead to a vicious cycle of price rises and higher wage demands.
In February, three of the BoE's nine monetary policy makers voted to raise interest rates, concerned that consumers might otherwise start to lose faith in the bank's ability to bring inflation back down.
UK interest rates have stood at 0.5 percent since March 2009, but investors expect them to rise before the end of the year, most likely by August.
The survey was based on interviews with nearly 4,000 people.
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