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Inflation

ended 13. March 2026

A quarterly survey on inflation expectations published by the Bank of England this morning found that, in February, Brits believed the inflation rate was 4.6%, down from 4.7% in November 2025. This in itself suggests the cost of living crisis continues to roll on, as inflation is currently sitting at 3%. The survey also found Brits are expecting inflation to slow over the coming year, with median expectations of the rate of inflation over the coming year at 3.2%, down from 3.5% in November 2025. Asked about expected inflation in the twelve months after that, respondents gave a median answer of 3.2%, down from 3.3% in November 2025. Other key findings below. Any thoughts on the reality Brits are about to face given the soaring oil price, and how high you think inflation could rise this year if the war in the Middle East continues, send them across ASAP as writing this story now.

  • Asked about expectations of inflation in the longer term, say in five years’ time, respondents gave a median answer of 3.7%, unchanged from 3.7% in November 2025.
  • By a margin of 72% to 4%, survey respondents believed that the economy would end up weaker, rather than stronger, if prices started to rise faster, compared to 74% and 4% respectively in November 2025.
  • 39% of respondents thought the inflation target was ‘about right’, up from 36% in November 2025. The proportions saying the target was ‘too high’ or ‘too low’ were 34% and 10% respectively.
  • 32% of respondents said that interest rates on things such as mortgages, bank loans and savings had risen over the past 12 months, down from 38% in November 2025. Meanwhile, 35% of respondents thought that interest rates had fallen over the past 12 months, up from 26% in November 2025.
  • When asked about the future path of interest rates, 30% of respondents expected rates to rise over the next 12 months, down from 38% in November 2025. 26% said they expected rates to stay about the same over the next twelve months, up from 24% in November 2025 and 29% said they expected rates to decline over the next twelve months, up from 25% in November 2025
  • Asked what would be ‘best for the economy’ – higher interest rates, lower rates or no change – 11% thought rates should ‘go up’, down from 13% in November 2025. 35% of respondents thought that interest rates should ‘go down’, compared to 36% in November 2025. 27% thought interest rates should ‘stay where they are’, unchanged from 27% in November 2025.
  • When asked what would be ‘best for you personally’, 27% of respondents said it would be better for them if interest rates were to ‘go up’, up from 26% in November 2025. 30% of respondents said it would be better for them if interest rates were to ‘go down’, unchanged from 30% in November 2025.
  • Respondents were asked to assess the way the Bank of England is ‘doing its job to set interest rates to control inflation’. The net satisfaction balance, the proportion satisfied minus the proportion dissatisfied, was 2%, up from -1% in November 2025.

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Editor
Nouran Moustafa
Practice Principal & IFA at Roxton Wealth
What this tells me is that people still do not believe inflation is under control, and that matters because sentiment shapes behaviour almost as much as the headline rate itself. Official inflation may be 3%, but households are still feeling years of cumulative pressure, and the latest oil shock risks pouring fuel on that again just as confidence was trying to recover. If the war in the Middle East drags on and energy stays elevated, I would not be surprised to see UK inflation push back towards 3.5% to 4% later this year, even if that proves temporary. The bigger danger is not just the number, it is what comes with it: weaker confidence, more caution from the Bank of England, and more pressure on already stretched households. People can handle bad news better than they can handle uncertainty, and right now uncertainty is back in a big way.
It also means hopes of a smoother path for rate cuts and lower borrowing costs could start to fade again very quickly.