Public gloomy over price prospects

The British public believes inflation will fall over the next year, but not as fast as the Bank of England hopes.

Its latest survey suggests the public thinks inflation – now 4.8 per cent – will average 4.1 per cent over the next year, whereas the Bank's chief economist, Spencer Dale, expects the cost of living to be in the "low threes" by early 2012.

Overall expectations for the cost of living are lower than in August, reducing the risk of pay demands forcing interest rate hikes.