Britons among most gloomy on inflation prospects

People in the UK are among the least confident that the financial authorities will bring inflation under control quickly, according to an Ipsos Mori survey of 29 countries around the world seen by the Financial Times.

The results show that six in 10 people surveyed in May thought it would take at least a year to return inflation to what they thought were normal levels with only the Swedish respondents showing a higher level.

The figures underline concerns at the Bank of England that the UK is now suffering from prices and wages ratcheting upwards in a process that will make consumer price inflation stay higher for longer.

The central bank is hoping that, in data to be published on Wednesday, a big decline in the official rate of CPI inflation for April will help to change attitudes and alleviate fears of persistently rapid price rises.

In the Ipsos Mori survey, which was conducted this month, 60 per cent of UK respondents said they thought it would take longer than a year to return inflation to normal levels, the same proportion as in the Netherlands and lower than the 64 per cent of people in Sweden who shared these fears.

In all other countries surveyed an average of 46 per cent said it would take more than 12 months to bring inflation back down.

The UK population’s result accords with the BoE’s own forecast that inflation will return to its 2 per cent target around the end of 2024 or at the start of 2025.

With inflation high and potentially sticky, UK households were also the most gloomy about their own disposable income levels of all the countries surveyed.

Some 46 per cent of Britons surveyed thought their disposable incomes — defined in the survey as after tax and paying bills for living expenses — would fall over the coming year.

Mike Clemence, a researcher at Ipsos Mori, said: “British opinion towards the cost of living crisis is significantly more negative than the overall global picture.”

UK households are facing higher costs and higher taxes because income tax thresholds and allowances have been frozen until 2028, dragging millions more into paying income tax both at the main 20 per cent rate and at higher rates.

When asked about their standard of living, however, UK respondents were more likely to say it will fall than the global average, but it was not as much of an outlier as with disposable income.

The Ipsos Mori results provide insight into the public’s inflation attitudes ahead of the BoE’s next quarterly survey, which will be published in mid-June.

In the February results of the BoE survey, members of the public were well aware of rising inflation, with the median respondent saying the inflation rate had been 9.2 per cent over the past year, close to the 10.4 per cent consumer price inflation rate that applied in February.

The median respondent expected inflation to be 3.9 per cent in the year ahead and then settle at a 3 per cent rate, still 1 percentage point above the central bank’s 2 per cent target.

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