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Interest rate rises would be best for a quarter of us

16 September 2010 / by Paul Dicken

Interest rate rises would be best for almost a quarter of people, according to the latest survey by the Bank of England on public attitudes to inflation.

The survey of over 2,000 people from 175 randomly selected areas showed that 23 per cent of people thought it would be best for them personally if interest rates went up, while 27 per cent of people said it would be better if rates were to go down.

The survey, used by the Bank of England to gauge public knowledge, attitudes and expectations around inflation and interest rates, found that 48 per cent expected a rise over the next 12 months, a slight decrease on the number in a May survey.

Only five per cent expected any further falls, with 39 per cent believing it would be best for the economy if rates stayed where they are.

The average expectation of the rate of inflation over the coming year was 3.4 per cent, up by 0.1 per cent from May. The majority of respondents, 62 per cent, believed the economy would end up weaker rather than stronger if prices start to rise faster.

Figures published by the Office for National Statistics on 14 September showed the Consumer Prices Index (CPI) rate of inflation was 3.1 per cent in August, the same as the previous month and still well above the 2 per cent Bank of England target.

The ONS said the largest upward pressures on prices were from air transport, clothing and footwear, and food.

Between July and August, air fares have increased by 16.1 per cent, clothing and footwear prices are up 2.8 per cent and the cost of food has been driven up by rising prices for bread, cereals and vegetables.

The European Commission said on 15 September that the rate of inflation for the Euro area (countries using the Euro) was 1.6 per cent in August and the UK rate is expected to decrease in coming months as economic growth weakens.

Asked in the survey whether they were satisfied with the way the Bank of England is doing its job to control inflation, 47 per cent of respondents said they were either very or fairly satisfied.

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