Consumers worried about rates and inflation |
MONEYFACTS ARCHIVE. This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Published: 08/05/2019

It seems that the state of the economy is playing on the minds of consumers, with latest survey data from the Bank of England revealing that many respondents are unsure whether interest rates will rise or fall in the next year, and a lot are concerned about rising inflation, too.

The results of the latest inflation attitudes survey showed that, even though consumers are already over-estimating the current rate of inflation – respondents gave a median answer of 2.9%, when in fact the figure is 1.9% – they're expecting it to rise further still in the coming year, with the average expectation being 3.2%, the highest seen since November 2013.

This could be "disappointing news" for the Bank's Monetary Policy Committee, commented Howard Archer, chief economic adviser to the EY ITEM Club, with the fact that inflation expectations remain at a five-year high perhaps reflects concerns that prices could rise amid ongoing economic uncertainty. Indeed, by a margin of 56% to 6%, survey respondents believed that the economy would end up weaker rather than stronger if prices started to rise faster, so many could well be hoping that their expectations don't come to fruition.

The survey went on to reveal that 47% of respondents expect interest rates to rise in the next year, while 22% expect them to stay about the same. Yet this suggests that over a quarter have no idea what will happen to rates in the year ahead, with this level of uncertainty again reflecting the mood of the wider economic landscape.

However, it's generally expected that the Bank of England won't touch interest rates until the economic picture becomes clearer, which means "there is a very real possibility that the Bank will keep interest rates at the current level of 0.75% throughout 2019," said Howard. There's no guarantee of course, but this expectation should at least give consumers some confidence that rates and prices hopefully won't rise to any extent in the near term.

Yet if you're at all concerned, there are things you can do to shore up your finances and ensure that, even if things got tricky, you wouldn't need to worry unnecessarily from a financial sense. Perhaps the best way of achieving this is to ensure you have a suitable savings pot built up to provide a financial buffer – it's generally recommended to have at least three months' worth of income set aside for emergencies – and for that you'll need to find the best savings rates.

Then, if you're borrowing, now could be the time to re-evaluate things. Consider switching to a 0% balance transfer credit card (for example) to clear your debts without interest adding to the bill, or consolidate with a low-cost personal loan. If you're about to come to the end of a fixed rate mortgage term, make sure to consider remortgaging rather than reverting to your lender's standard variable rate – not only will it be cheaper, but mortgage rates are still comparatively low at the moment, which means now could be a great time to reconsider your options.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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