U.K. Consumers Put Inflation Rate at Highest Since 2014

(Bloomberg) -- U.K. consumers are feeling the impact of faster inflation.

In the Bank of England’s quarterly inflation survey, the median answer for the current rate of inflation among respondents was 3.1 percent -- the highest in the poll since August 2014 and up from 2.9 percent in November. More than a quarter of those surveyed put the rate above 4 percent, while the median expectation for inflation over the next year was 2.9 percent.

U.K. Consumers Put Inflation Rate at Highest Since 2014

The results show how the higher prices caused by the pound’s decline since the Brexit vote are filtering through to consumers’ thinking. The U.K.’s official inflation rate was at 3 percent in January, after reaching a more-than five-year high of 3.1 percent in November, while, in a speech this week, the BOE’s chief economist Andy Haldane said that the personal inflation rate of some U.K. citizens is running closer to 10 percent.

With wage growth still relatively low, that’s creating a squeeze on consumers, and crimping their spending. It also has implications for BOE policy makers, who are trying to bring price growth back to their target of 2 percent.

Officials, who hiked interest rates for the first time in a decade last year, have said more increases will be necessary, with investors betting the next move could come as soon as May. In the BOE’s survey, carried out between Feb. 7 and Feb. 18, 58 percent of the 4,254 respondents expected rates to rise over the next 12 months, down from 63 percent in November.

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