Many consumers believe the Bank of England’s monetary policy committee (MPC) will increase interest rates over the next year.
According to a poll by Lloyds TSB, 66 per cent of consumers expect interest rates to rise in the next 12 months rather than fall or stay at the current level of five per cent.
Furthermore, 88 per cent of people questioned by the bank said they are expecting food and fuel bills to continue increasing.
Chief economist at Lloyds TSB Corporate Markets Trevor Williams stated that consumer spending will slow considerably in the coming months as consumers predict further inflation rises.
He remarked: “Should the MPC be forced to increase rates over the months ahead, then at least this will come as no surprise to consumers.”
Mr Williams also said that when it comes to household spending, consumers are getting ready “for the worst”.
The MPC is to reveal the outcome of its monthly two-day interest rate meeting on Thursday.