Public expectations for this year’s financial events include an inflation bump not seen since 2008.
According to data collected by YouGov and Citi, the predicted increase has moved from 2.9 per cent (April) to 3.4 (May) to 3.9 per cent at present. The survey also indicates that few people are planning on making expensive purchases, unfortunately for high street shops. This, combined with the response to NS&I’s Saving Survey - that a quarter of British consumers do not feel they will be able to save more in the coming months - suggests many are struggling simply to stay afloat.
While the interest rate is still at its record low of 0.5 per cent, the Bank of England’s rate-setting committee has a tough decision to make, especially in light of these findings. Deputy Governor Paul Tucker counts himself among those “worried about the possibility of an upward drift in inflation expectations.”
On the other hand, the Office of National Statistics made it clear that the royal wedding made April "an unusual month" due to the additional public holiday, which affected the services industry and thus 75 per cent of the economy.
