Consumers 'overestimate inflationary pressure'
Published On 15 September 2007
British consumers expect inflation to continue to be a problem in the coming year, official figures have revealed.Data released by the Bank of England showed that consumers thought that inflation would by increase around 2.7 per cent over the coming year.
Despite the fact that consumer price index (CPI) inflation actually fell back to 1.9 per cent in July, consumers remain unconvinced of the health of the economy.
Indeed, the survey found that most people in the country believed that inflation was currently at 2.8 per cent.
Experts said that the figures would be disappointing for the Bank - which carefully monitors consumer consensus when making decisions about future interest rate movements.
However, Global Insight chief economist Howard Archer said that an interest rate cut was still on the cards, but not in the immediate future.
He explained: "Ongoing relatively elevated inflation expectations highlight the fact that there are still significant medium-term inflation risks, and reinforce our belief that the Bank of England will be very wary about any early trimming of interest rates."
