Why do people think the risk of inflation is so much bigger than it really is?

I have reviewed the Bank of England’s latest survey of opinion on inflation, which has just been published. The results are, to be kind, quite bizarre.

Most people rightly know inflation is more than 5%, but quite bizarrely a third think it has been less than that:

When asked how inflation will change people are hopelessly wrong in the short and medium terms:

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

They are sure inflation is tumbling. And in 2024 they think it could be heading for zero.

So do the Bank of England. This is from the last Monetary Policy Committee report:

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.

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.

So, a quick poll:

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