The BoE/Ipsos Inflation Attitudes Survey showed UK households nudging inflation expectations higher. Median expectations for inflation over the next year rose to 3.6% from 3.2% in May, while two-year expectations climbed to 3.4% from 3.2%. Longer-term inflation expectations, five years out, also ticked up to 3.8% from 3.6%.
Concerns over rising prices were tied to broader pessimism about growth. By a margin of 69% to 6%, respondents said the economy would end up weaker rather than stronger if inflation accelerated, compared with 67% to 5% in May.
On the interest rate outlook, 33% of respondents expected rates to rise over the next 12 months, unchanged from May. But more people now expect stability, with 26% seeing no change versus 21% in May. The share expecting cuts fell to 29% from 34%, suggesting households are adjusting to the prospect of “higher for longer” rates.
When asked what would be best for the economy, 33% favored lower rates, down from 37% in May. Meanwhile, 28% preferred no change, up from 26%, and 14% wanted higher rates, up slightly from 12%. The responses suggest growing acceptance that policy will remain restrictive even as concerns about inflation remain elevated.
