Respondents of the survey overestimated current inflation levels in a February public poll, but they were more optimistic than the Bank of England’s forecast for the coming year.
The latest Bank of England Inflation Attitude Survey found that the public estimated inflation in February at 4.9%, while the official figures put the real figure at 3% in the latest data for January.
Looking ahead, however, survey respondents expect inflation to be at 3.2% next year, although the bank itself is expected to grow by 3.7%.
When asked about the path to future interest rates, 34% of respondents expected rates to rise in the next 12 months, up from 33% in November 2024.
However, the market pricing is cut.
Meanwhile, the expected interest rates are expected to remain unchanged over the next twelve months, higher than 22% in November 2024, and the expected rate declines by 29% in the next 12 months, lower than 34% in November 2024.
“People tend to overestimate the height of inflation and underestimate the low levels of savings and borrowing rates,” said Sarah Coles, head of personal finance at Hargreaves Lansdown.
“It’s not a huge shock: they have a busy life and keeping these things is not top priority. But if you’re too far away, you might feel an annoying surprise.
“When asked to guess what inflation will be in February, they know that inflation has fallen, not how far.
“At the same time, when asked to estimate what happened to savings and mortgage rates, they thought the rates had risen – in fact, they actually had some down.”
