Public’s view of Bank of England falls to all-time low as prices soar
UK public satisfaction with the Bank of England’s approach to tackling inflation has fallen to a new all-time low as soaring prices force households to cut spending on food and fuel, according to official data.
A survey published by the central bank on Friday found that, in November, 35 per cent of people were dissatisfied with its handling of inflation, which is running at a 41-year high of 11.1 per cent.
Only 23 per cent of people were satisfied with the BoE’s performance, meaning net satisfaction dropped to minus 12 per cent. That is down from minus 3 per cent registered in the last survey in August, and the lowest rating since records began in 1999.
The findings, based on data collected between November 4 and 7, come as a separate survey from the Office for National Statistics on Friday laid bare the impact of the cost of living crisis on household spending.
According to the ONS, about two-thirds of people cut non-essential spending and energy usage in the two weeks to December 4. For energy usage, that is nearly double the proportion at the start of this year.
Almost half of respondents also said they had reduced spending on food, while 25 per cent said they were dipping into their savings to cope with the rising cost of living.
Yael Selfin, chief UK economist at advisory firm KPMG, said the data showed that household budgets had “come under pressure from a combination of higher prices, especially on food and energy, as well as rising interest rates”.
Selfin added that lower-income households were “particularly exposed to the mix of current price pressures, as the most affected spending categories largely fall on necessities”.
The ONS’s findings support this view, with double the proportion of the poorest households cutting food spending compared with the richest. Most respondents reported being concerned about keeping warm in their homes this winter.
The survey also found that one-third of people had had difficulty meeting rent or mortgage payments, and that roughly one in 12 adults had cancelled a financial product, such as a pension contribution, in the past month.
Economists polled by Reuters expect inflation to have declined to 10.9 per cent in November when data is released on Wednesday, still well above the BoE’s 2 per cent target. Respondents to the central bank’s survey anticipated average inflation of 3.3 per cent in five years’ time, up from 3.1 per cent in August.
Markets expect the BoE’s Monetary Policy Committee to raise interest rates by 50 basis points to 3.5 per cent, the highest level since 2008, when it meets on Thursday.
Andrew Goodwin, chief UK economist at the consultancy Oxford Economics, said Friday’s data, coupled with weak sentiment indicators from earlier this week, showed the UK economy was drifting into recession, “with the impact of very high inflation on household spending power [being] the key cause”.