40% of people think the Bank of England has managed inflation badly, according to the Bank of England/Ipsos Inflation Attitudes Survey for August 2023.
This figure marked the highest rate of dissatisfaction so far this millennium.
According to the survey, 63% of people expected interest rates to rise over the next 12 months – up from 57% in May.
A further 19% of respondents expected rates to remain the same.
13% of people thought rates should rise for the best interests of the economy, 40% that they should fall; 25% said it would be better for them if rates went up, and 34% said it would be better if they fell.
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “Inflation impatience is spreading. People are increasingly frustrated by the fact they’re having to live with horrible rises in interest rates, and yet still prices are rising at a rapid rate.
“If inflation figures increase slightly as expected next week, this is going to add insult to injury.
“Increases in the cost of fuel and alcohol are expected to mean a small bump in August’s inflation figures, which will help cement an expected interest rate rise the following day.”
She continued: “It’s easy to see why people are getting frustrated. They actually slightly over-estimate how high inflation is right now.
“And although they expect it to drop in the next 12 months, they’ve been waiting for this to happen ever since rates started rising in December 2021 – almost two years ago.
“For the Bank of England, the challenge is clear. Slowing the economy by pulling the lever of interest rates is always like trying to slow a supertanker.
“You can expect to travel an awfully long way before your actions take effect. This time, however, the ship has reached a new time zone without inflation getting close to its target.”
Myron Jobson, senior personal finance analyst at interactive investor, added: “The public’s confidence in the Bank of England’s ability to control inflation continues to wane – a finding that could increase pressure on the UK’s central bank, which has come under fire for failing to predict the scale and persistence of inflation.
“Market sentiment suggests that the Bank of England are odds on to increase interest rates to 5.5% next week, in a bid to further curb price increases.
“While the public’s expectations on inflation by August next year is broadly in line with the Bank of England’s own forecast, when asked about expectations of inflation in five years’ time, respondents gave a median answer of 2.9%.
“The reality is no one short of a functioning crystal ball could provide an accurate answer, but the fact that respondents gave an average figure that is almost one percentage point higher than the 2% target is hardly a vote of confidence in the Band of England’s ability to keep a handle on inflation.”
He continued: “Higher interest rates have resulted in acute mortgage pain for homeowners who have recently come off fixed rate deals – many of whom have seen their monthly repayment go up by hundreds of pounds.
“It is little wonder then that there is an increase in the number of people who said it would be better for them if interest rates decreased.
“A number of factors can lead to an overestimation or underestimation of the true rate of inflation in their daily lives.
“When prices are running high, it is important to understand your financial position, looking at your expenditure and income to gauge the true impact of rising prices on your finances, instead of letting your perception of inflation run away with your wallet.”
