Increasing numbers of people want to see the Bank of England put up the interest rate, amid dismal returns on savings.
According to the results from the Bank of England/GfK NOP inflation survey, 21% of people think a base rate increase would be best for the economy, compared with just 8% who wanted to see a rate hike in the last survey in November. Although 17% of respondents would prefer base rate to fall further, this is down significantly from the 46% of people recorded in November.
Ultimately, consumers appear to want the Bank of England interest rate to stay were it is, with 32% calling for a rate freeze.
On a personal level, 30% of people say they would benefit from higher rates - the highest proportion since the survey began in November 1999.
The survey also reveals that British consumers' perceive inflation – or the cost of living – to be higher than it currently is.
The Consumer Prices Index – the official measure of inflation – is currently 3%, down from a peak of 5.2% in September. However, it is still a full percentage point above the government’s 2% target.
According to the results from the Bank of England inflation survey, Britons think the current rate of inflation is 4.2%.
When quizzed on what will happen to inflation this year, consumers predict it will fall to 2.1%.
Vicky Redwood, UK economist at Capital Economics, says people’s inflation expectations are “too low for comfort”.
Capital Economics believes that the UK will enter a period of deflation – where prices actually fall – at some point this year. There are concerns that, if people expect prices to keep on falling, they will put off spending. This could cause deflation to become entrenched in the economy, a dangerous situation that would cause the recession to turn into a depression.
“The bigger danger is that inflation expectations remain low, helping to perpetuate a vicious deflationary spiral,” Redwood adds.