Consumers in UK feel cost of living has soared

Consumers in the UK believe the cost of living has continued to soar despite recent measures to bring the economy under control, a survey revealed today.

The Bank of England’s quarterly poll of public attitudes to inflation showed that, on average, people feel the annual rate of inflation has rocketed to 3.1%, the highest level since the survey began in 1999.

The perception of inflation has increased steadily over the past year and was 2.9% in the last survey, published in February.

The expectation for inflation over the year ahead is that it will drop to 2.7% - unchanged since the last quarterly questionnaire, but still at a record high.

The results suggest that public perception of inflation is at odds with the official figures.

The rate of inflation, as measured by the Consumer Prices Index (CPI), fell to 2.8% in April from the 3.1% recorded in March, which was the highest since the Bank took charge of interest rates in 1997.

Earlier this week, the latest inflation data revealed that CPI had eased again, hitting 2.5% last month.

The Bank has raised interest rates four times since last August in a bid to bring inflation back down to its 2% target.

Only half of those questioned in the study, conducted by independent pollsters GfK/NOP, said they were happy the Bank was successfully doing its job in setting rates to keep a lid on inflation, while a fifth thought the 2% target was too high.

The study also showed that just under a third thought lower interest rates would be “best for the economy”.

Investec economist Philip Shaw said the publicity surrounding inflation this year may have had an effect on public perception, but expects the survey results to show lower forecasts for the cost of living as the effects of energy price drops kick in further.

He added: “People would like lower inflation but often do not realise that if inflation was low, their wage increases would be lower as well.”

Nearly 2,000 people aged 15 and over were surveyed last month.

The Bank has commissioned the study every three months since November 1999.