The latest Bank of England Inflation Attitudes Survey has been published.
Asked to give the current rate of inflation, respondents said 4.9%, up from 4.8% in November 2024.
Meanwhile, expectations of the rate of inflation over the coming year were 3.4%, up from 3% in November 2024.
When asked about the future path of interest rates, 34% of respondents expected rates to rise over the next 12 months, up from 33% in November 2024. A
dditionally, by a margin of 71% to 4%, survey respondents believed that the economy would end up weaker, rather than stronger, if prices started to rise faster, compared to 66% and 6% respectively in November 2024. Newspage asked financial services experts for their views, below.
Andrew Montlake, Managing Director at Coreco said, “That people believe inflation is almost 5% shows the immense pressure household finances are under.
“The cost of living crisis is ongoing and higher interest rates are adding fuel to the fire. And despite the contraction of the economy in January, it may be some time yet before we get that first rate cut given the direction of inflation. More people also now believe the economy will weaken further if prices start to rise faster, and they may well be proved right. 2025 is shaping up to be another challenging and turbulent year.”
Emma Jones, Managing Director at Whenthebanksaysno.co.uk added, “Though inflation is currently at 3%, the fact that people believe it is far higher says a lot about sentiment in the economy. The cost of living crisis continues for many and policymakers at the Bank of England should take note.”
Jamie Elvin, Director at Strive Mortgages said, “The public remains wary of inflation, with expectations rising to 3.4% despite the broader downward trend.
“This suggests many still feel the squeeze of higher prices. Meanwhile, a growing number anticipate interest rate hikes, highlighting uncertainty over when borrowing costs will ease. The data signals a cautious economic outlook, with confidence in a swift recovery still fragile.”
Elliott Culley, Director at Switch Mortgage Finance added, “Unless there is a huge rise in inflation, above levels predicted by the Bank of England, then I think an increase in rates is unlikely.
“The Bank of England have been aware for some time that inflation was going to rise in 2025, due to increased NI contributions and utility bills. The Bank of England expects inflation to rise, but the percentage by which it does will be key.”
