The expected rate of inflation among Britons reached the highest level since November 2008, a closely watched survey showed Thursday.
The annual rate of inflation over the coming year is seen at 2.5%, slightly higher than the 2.4% estimated in November, the latest quarterly Inflation Attitudes Survey from the Bank of England and market research group GfK NOP showed Thursday. This is the highest rate since November 2008, when it was 2.8%.
GfK NOP interviewed 4,142 people between February 4 and 16. Respondents assessed the current inflation rate at 3.4%, up from 3.2% in the previous survey period. Around 54% of respondents thought the inflation target was 'about right', the same proportion as in November. Meanwhile, 21% said the target was 'too high' and 12% said it was 'too low'.
Annual inflation in January accelerated to 3.5%, the highest since November 2008. As annual inflation exceeded the 2% target by one full percentage point, the central bank governor Mervyn King wrote an open letter to the Chancellor explaining the reasons why inflation increased to such an extent and what the bank proposes to do to ensure inflation comes back to the target.
Commenting on the latest survey, Capital Economics' Vicky Redwood said the recent increase in inflation had little upward effect on households' inflation expectations. The economist added that expectations may take time to react to the recent rise in inflation.
"But with the economic recovery still struggling and pay growth very subdued, we doubt that a significant pick-up is likely," said Redwood. The data supports the BoE's judgment to look through the near-term rise in inflation. The economist still views deflation as the key risk.
Further, the survey found that 53% of respondents expect interest rates to rise over the next 12 months, compared with 47% in November. And 6% of respondents forecast interest rates to fall over the next 12 months.
Nearly 24% of respondents considered that higher interest rates are best for the economy, while 15% thought interest rates should 'go down' and 36% said rates should 'stay where they are.' At the same time, when asked what would be 'best for you personally', 28% of respondents said interest rate should 'go up', higher than the 25% in November. About 25% said it would be better for them if interest rates were to 'go down'.
Further, the survey showed that more respondents favored a raise in interest rates than accelerating inflation. When asked in February if a choice had to be made either to raise interest rates to try and keep inflation down, or to keep interest rates lower and allow prices to rise faster, 66% of respondents said interest rates should rise, while 17% said prices should be allowed to rise, the survey said.
The net satisfaction index, measuring the assessment the way the Bank of England is 'doing its job to set interest rates to control inflation' rose to 28% from 24% in November. That was the highest balance since February 2008.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.