Almost half of UK investors think that inflation will be above 2% in six months time

• UK investors are not convinced that inflation will continue its downward trajectory, or even stay at 2%, according to research from the wealth manager Charles Stanley, with 48% of DIY investors believing that inflation will rise again over the next six months
• 44% of investors predict that in six months time inflation will either be 2% or lower.
• However, investors overwhelmingly believe that interest rates will be below their current levels in six months time – 79% believe rates will be below 5%
• 13% think that interest rates will be back to their pre-2022 levels of between 0% and 1% in time for Christmas.

Rob Morgan, Chief Investment Analyst at Charles Stanley Direct, comments: “Inflation remains stable, balancing around the Bank of England’s 2% target as higher interest rates successfully exert a dampening effect on prices.

“But it’s not time to pop the Champagne corks just yet. There are two sides to the inflation story. While goods inflation, including food, has come under control, core CPI (excluding energy, food, alcohol and tobacco) looks set to remain higher, indicating lingering pressures. While the worst of the post-Covid inflation burst is behind us, a strong jobs market, buoyant wage growth, mildly improved British growth, and lingering supply chain issues may push prices up in the months to come. All eyes will be on Thursday’s data on wages, the key input into service inflation, before a decision can be made about a rate cut next month.

“Almost half of British DIY investors are not confident that inflation will remain on track, but the vast majority expect rate cuts to follow regardless. Many will be balancing both their portfolios and their household budgets accordingly, increasing their exposure to equities to ensure their investment outpace cash returns, ensuring they’re on the best mortgage rates, and chasing the best cash savings rates.”
 
Methodology
 
Research was carried out for Charles Stanley by Censuswide. It surveyed 1,007 DIY Investors in the UK (’Self-Directed’), defined as; investors who actively choose their own investments, making their own asset allocation decisions, aged 18+. Survey conducted between 05.07.2024 and 10.07.2024.