Inflation expectations are close to the Bank of England’s target of 2 per cent, in spite of fears that record low interest rates could spark an inflationary surge or the economy plunge into a deflationary slump.

The public expects prices to rise by 2.4 per cent over the 12 months from May, slightly higher than the 2.1 per cent it foresaw in February, according to a quarterly survey by the Bank of England and GfK NOP, the market researchers.