{"id":68574,"date":"2023-03-18T07:05:02","date_gmt":"2023-03-18T07:05:02","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=68574"},"modified":"2023-03-18T07:27:52","modified_gmt":"2023-03-18T07:27:52","slug":"why-do-people-think-the-risk-of-inflation-is-so-much-bigger-than-it-really-is","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2023\/03\/18\/why-do-people-think-the-risk-of-inflation-is-so-much-bigger-than-it-really-is\/","title":{"rendered":"Why do people think the risk of inflation is so much bigger than it really is?"},"content":{"rendered":"

I have reviewed the Bank of England's latest survey<\/a> of opinion on inflation, which has just been published. The results are, to be kind, quite bizarre.<\/p>\n

Most people rightly know inflation is more than 5%, but quite bizarrely a third think it has been less than that:<\/p>\n

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When asked how inflation will change people are hopelessly wrong in the short and medium terms:<\/p>\n

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Almost without exception, they think high price increases (which are what inflation is) are here to stay. This totally contradicts data\u00a0 from the Office for Budget Responsibility report<\/a> on the economy this week:<\/p>\n

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They are sure inflation is tumbling. And in 2024 they think it could be heading for zero.<\/p>\n

So do the Bank of England. This is from the last Monetary Policy Committee report<\/a>:<\/p>\n

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Very low inflation is likely - less than 1% in 2024 with deflation quite possible too. Which does not mean prices will fall. But it does mean they will stop rising.<\/p>\n

What the Bank of England needs to ask is why people's inflation expectations are so wildly out in that case, because they so obviously are.<\/p>\n

So, a quick poll:<\/p>\n

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Why do people think the risk of inflation is much higher than it actually is?<\/strong><\/p>