The Bank of England was given a boost today as a survey showed the public’s inflation expectations have fallen back sharply.
Asked in February to estimate the rate of inflation in a year, the average response was 2.8 per cent, down from 3.4 per cent when the question was put in November.
The quarterly survey, conducted on behalf of the Bank by GfK NOP, also found that 34 per cent of those questioned are planning to cut back spending and save more, down from 52 per cent in February 2013.
Just 7 per cent said they would push for higher pay from employers, falling from 10 per cent a year ago.
The news will be a relief to the Bank’s monetary policy committee, which has said it hopes to keep interest rates low to support the recovery.
Rising public inflation expectations could have scuppered that plan, forcing an earlier rate rise. Financial markets are currently pricing in the first rate rise for Spring 2015.
Asked to give the current rate of inflation, the average answer from the public was 3.5 per cent, down from 4.4 per cent in November.
The actual rate of consumer price inflation in January was 1.9 per cent.