The Bank of England has recently released the results of its quarterly Survey on Public Attitudes to Inflation. The survey, conducted by Ipsos between 2 and 6 August 2024, provides important insights into how people perceive the rate of inflation and the economy in general. Since February 2022, Ipsos has been running the survey from Kantar. The data was collected from a diverse sample of people in the UK aged between 16 and 75. Due to government-imposed social distancing restrictions, interviews have been conducted online since May 2020. These changes in the data collection method may affect the comparability of the results with previous face-to-face surveys.
The changes in the data collection method require caution when comparing recent surveys with those conducted before May 2020. For example, the proportions of respondents who answered “don’t know/no idea” have changed significantly. Since August 2020, this option has been more evenly distributed with the other options in the questionnaire, bringing the proportions back to normal levels.
Survey highlights
- Current inflation rate: When asked about the current inflation rate, respondents gave a median answer of 5.2%, down from 5.5% in May 2024. This change indicates a general perception that the current inflation rate has slowed compared to the previous month.
- Inflation expectations for the coming year: Participants’ median inflation expectations for the coming year were 2.7%, down slightly from 2.8% in May 2024. This reflects a more optimistic outlook for price stability in the near future.
- Inflation expectations for the next 12 months: Participants gave a median inflation forecast for the next 12 months of 2.6%, the same as in May 2024. This indicates stability in short-term expectations.
Long-term inflation expectations:
When asked about inflation in five years, respondents gave a median of 3.2%, up slightly from 3.1% in May 2024. This slight increase indicates continued concern about price stability in the long term.
1: Perception of the economy if prices rise: 67% of respondents believe the economy will become weaker if prices rise rapidly, compared to 65% in May 2024. This reflects an increase in concerns about the impact of rapid inflation on the economy.
2: Assessing the inflation target: 45% of respondents see the inflation target as “about right,” up from 40% in May 2024. While 33% see the target as “too high,” and 8% see it as “too low.”
3: Interest rate changes: 55% of respondents said interest rates have risen in the past 12 months, down from 64% in May 2024. In contrast, 11% believe interest rates have fallen, up from 6% in May 2024.
4: Future interest rate expectations: 29% of respondents expect interest rates to rise in the next 12 months, down from 34% in May 2024. 22% said they expect rates to stay the same, down slightly from 25% in May 2024.
5: Best interest rate options: When asked what would be “best for the economy,” 9% thought interest rates should “go up,” down slightly from 10% in May 2024. 42% thought rates should “go down,” while 28% said rates should “stay the same.” 6: Personal preferences for interest rates: 23% of respondents said they would be better off if interest rates rose, down slightly from 24% in May 2024. 33% said they would be better off if interest rates fell, down from 31% in May 2024.
Bank of England performance assessment
When respondents were asked to rate the Bank of England’s performance in setting interest rates to control inflation, the net satisfaction ratio was 4%, an improvement from -4% in May 2024. This improvement reflects an increase in public satisfaction with the Bank’s policies.
Interpretation of the results: The latest survey results show significant changes in public perceptions of inflation and interest rates. Changes in the proportion of responses and expectations reflect the impact of the current economic situation on respondents’ views. The decline in near-term inflation expectations and the slight increase in long-term inflation expectations may indicate a general improvement in economic confidence, despite some concerns about future stability. In addition, the improvement in the Bank of England’s performance rating may be due to the Bank’s policies in trying to achieve economic stability. Changes in public opinion on interest rates indicate a ambivalence in attitudes towards monetary policy, reflecting a need for greater clarity and communication from the financial authorities.
Inflation expectations for the coming year: The median inflation rate forecast for the coming year was 2.7%. This is down from 2.8% in May 2024. This change indicates increased optimism about price stability in the short term. This improvement is likely linked to economic measures taken to deal with inflation.
. Inflation expectations in the next twelve months: Participants expected inflation to be 2.6% in the next twelve months. This figure remained stable compared to May 2024. This stability suggests that there have been no major changes in public expectations about prices in the short term.
Longer-term inflation expectations: When participants were asked about their expectations for inflation in five years, they gave a median of 3.2%. This represents a slight increase from 3.1% recorded in May 2024.
