UK Inflation expectations fall

According to UK consumers predictions inflation is expected to fall to at least the levels experienced in 1999 as the recession begins to take a deeper hold according to survey conducted by GfK NOP on behalf of the bank of England.

The survey of 2,065 people in the middle of November revealed that it is the biggest drop since the start of the survey nine years ago which is about economists expectations regarding consumer sentiment coming up to Christmas.

As the economy is stumbling through recession, according to Andrew Sentance a BoE policy maker has warned against the threat of deflation as interest rates are brought down to their lowest levels since 1951.

The overriding concern is that the BoE will miss the target 2 percent inflation, although with the possibility of a further cut in interest rates it is hoped that consumer price inflation will also continue to fall over the next coming months.

Inflation is now falling at its fastest rate for over 11 years and similarly the BoE governor has not ruled against the risk of inflation at a time when the nation’s economic prospects are getting worse.

In the third quarter the economy has contracted by half a percent with further contraction expected in the new year.

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