Consumers' expectations of inflation are holding steady

CONSUMERS&rsquo; expectations for inflation over the next year remained steady in August at 2.4 per cent, a quarterly survey from the Bank of England showed yesterday. <br /><br />The Bank of England/GfK NOP survey showed that Britons&rsquo; current expectations of inflation were 3.8 per cent, down from four per cent in May, but well above the 1.6 per cent August inflation figure reported earlier this week. The retail prices index recorded an annual rate of deflation of 1.3 per cent.<br /><br />Inflation has fallen at a much slower pace in the UK compared to other countries in Europe and in the United States. <br /><br />The results of the survey indicate fears of high inflation and deflation have receded, which should reinforce the Monetary Policy Committee&rsquo;s belief that underlying inflationary pressures are likely to remain muted, IHS Global Insight&rsquo;s Howard Archer said.<br /><br />This leaves the door open for loose monetary policy well into 2010 and a further extension of quantitative easing if bank lending does not pick up. <br /><br />The survey also showed that only 15 per cent of respondents think the Bank is doing a satisfactory job in setting interest rates to control inflation, down from 17 per cent in May.