Four-fifths of consumers envisage interest rate 'hike'

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Four-fifths of consumers envisage interest rate 'hike'

Mon 4th Jun 2007

Nearly four-fifths of consumers expect interest rates to be higher in a year's time, according to new figures released by Lloyds TSB Corporate Markets.

The group's latest consumer barometer shows that after a further quarter point rate rise last month, which brought the current base rate to 5.50 per cent, the overall balance of consumers expecting a rise in the next year also dropped to 70 per cent.

An increasing number of respondents said that a succession of recent interest rate rises had negatively impacted upon their job security, with employment perception prospects also reducing slightly.

Consumers' view on prices also began to relax during May, with the balance of respondents believing prices to have risen rather than fallen during the month falling three per cent to 60 per cent.

Trevor Williams, chief economist at Lloyds TSB Corporate Market, said: "Last month's interest rate rise did little to convince consumers that rates had reached a peak."

He added: "We're just beginning to see the impact of May's rate rise on consumers with sentiment on job security and prices starting to cool."

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