The monthly survey asked 2,000 consumers to predict what the official rate of inflation would be in a year's time. On average, respondents said the official rate would be 5%, up from 4.8% in July. This figure has risen in each of the previous 10 months.
Despite rising inflation expectations, the prospect of slower economic growth led to a smaller number of consumers predicting that interest rates may rise. For the first time since April, when interest rates were last cut, the balance of consumers that predicted higher, rather than lower interest rates next year dropped 9% to 47% in August. Even so, 60% of consumers still reported that they believed interest rates would be higher in 12 months' time, versus 13% that predicted a fall.
Job security fears intensified in August, falling again to a new survey low. The balance of respondents who felt more rather than less secure in their own job fell for the sixth successive month to -19% from -17% in July. On a more positive note, consumers' outlook for employment prospects in the UK improved slightly in August. This was illustrated by the balance of respondents who believed prospects were better, rather than worse than a year ago, which rose by 1% to -56%.
