Bank of England Survey Shows Public Expects Rise in Cost of Living

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22nd June 2012 15:25 - Financial Services

The results from a poll conducted in February by the Bank of England has shown that almost two-thirds of people surveyed now expect the rate of inflation to rise in the next 12 months.

In total, 62% of those who gave their opinions this year were expecting an inflation rise, compared to 52% in November.

Less than one in 10 people said they would demand higher wages to help offset the  increased cost of living. However if the UK public ask for pay rises because they expect prices to continue rising, it could create a negative inflation spiral.

To prevent this, the Bank of England takes the public's inflationary expectations seriously, so this could influence their decisions on whether interest rates should rise.

This latest inflation attitudes research showed that 66% thought interest rates should rise to balance the expected rise in inflation. It would spell good news for savers if this happened, since currently their interest payments have been small but conversely inflation is decreasing the value of their saved funds.

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