London - UK consumers are feeling the impact of faster inflation.
In the Bank of England’s (BoE) quarterly inflation survey, the median answer for the current rate of inflation among respondents was 3.1% - the highest in the poll since August 2014 and up from 2.9% in November. More than a quarter of those surveyed put the rate above 4%, while the median expectation for inflation over the next year was 2.9%.
The results show how the higher prices caused by the pound’s decline since the Brexit vote are filtering through to consumers’ thinking.
The UK’s official inflation rate was at 3% in January, after reaching a more-than five-year high of 3.1% in November, while, in a speech this week, the BoE’s chief economist Andy Haldane said that the personal inflation rate of some UK citizens is running closer to 10%.
With wage growth still relatively low, that’s creating a squeeze on consumers, and crimping their spending. It also has implications for BoE policy makers, who are trying to bring price growth back to their target of 2%.
Officials, who hiked interest rates for the first time in a decade last year, have said more increases will be necessary, with investors betting the next move could come as soon as May.
In the BoE’s survey, carried out between February 7 and February 18, 58% of the 4 254 respondents expected rates to rise over the next 12 months, down from 63% in November.
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