Brits have absolutely no idea where inflation is, survey suggests
Rishi Sunak is keen to tell Brits inflation has fallen – but the public doesn’t appear to have noticed, a new Bank of England survey suggests.
Though inflation is nearing the government’s two per cent target, the average person in the middle of May believed it was at 5.5 per cent, according to the poll.
Ipsos, on behalf of the central bank, interviewed a sample of Britons aged between 16 and 75 last month, when the latest inflation reading was 3.2 per cent in March.
Later figures showed inflation fell to 2.3 per cent in April, with Sunak shortly afterwards calling the general election for 4 July – touting the reading as proof of economic progress under his government.
Some have argued that Sunak’s timing was influenced by economists’ forecasts that inflation will rise again later this year. Survey respondents gave a median estimate of 2.8 per cent for the rate of inflation over the coming year.
The Bank’s poll also revealed that more than a third (34 per cent) of Britons thought the two per cent inflation target was too high, with 10 per cent saying it was too low and 40 per cent thinking it was “about right”.
Nearly a quarter (24 per cent) of respondents were against cutting interest rates when asked what would be “best for the economy”. Meanwhile, 42 per cent said rates should go down and 10 per cent thought they should go up.
Interest rates remain at a post-financial crisis high of 5.25 per cent, with policymakers not expected to lower borrowing costs until August or September.
The inflation data for April came in hotter than economists’ had expected and is considered to have mostly killed the chance of a rate cut in June.
The Bank’s Monetary Policy Committee is due to meet next Thursday for its latest interest rate decision.