People wrongly think the inflation rate was still as high as 5.2% in August, the Bank of England’s inflation attitudes survey has revealed.
The reality is the inflation rate dropped to 2.2% in July.
Similarly over half (55%) of people reckon interest rates on mortgages have risen in the past 12 months, despite them falling.
The data suggests it may take some time for better economic conditions to filter through to the general public.
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “When asked to estimate inflation, on average people over-estimated. This is understandable. Talk of higher inflation has been everywhere, and budgets are tight.
“So while people know inflation has fallen, they may not know how far. Meanwhile, when asked to estimate what’s happening with savings and mortgage rates, they assume they have risen.
“That’s not a surprise either. The Bank of England raised rates relentlessly for almost two years, and hit the headlines every time. The fact that the last rate hike was over a year ago is easily missed – unless you specifically keep an eye on it.”
