UK consumers estimate inflation at 8.1%

Britons think the cost of living is soaring by nearly four times the official rate of inflation, a survey showed today.

UK consumers thought the price of goods and services was rising at an annual rate of 8.1% on average in January, despite the official rate of inflation standing at 2.2% during the month, according to financial website Fool.co.uk.

Just 7% of people thought inflation was close to its actual level, with 53% estimating it to be between 7% and 12%, while 5% of those questioned thought it was over 15%.

The findings come the day after similar research by the Bank of England showed that consumers think inflation is running at an average rate of 3.9%.

According to the Fool.co.uk research people aged between 42 and 49 think inflation is highest, with people in this age group estimating it to be an average of 8.8%.

People in the West Midlands also thought it was running at 8.8% during January, while those in Northern Ireland estimated the lowest figure at 6.8% on average, although this is still more than three-times above the actual level.

David Kuo, head of personal finance at Fool.co.uk, said: "The Government can boast as much as it wants about its success over controlling inflation.

"However, people feel inflation through the shrinking pound in their pockets, they don't experience it through a theoretical Government shopping basket. For most consumers, the true rate of inflation is much higher."