The threat that the Bank of England's concerns about inflation will lead it to peg interest rates until the summer increased yesterday after it said that Britons expected prices to keep rising.

The public's expectations of inflation, a crucial issue for the rate-setting Monetary Policy Committee (MPC), continued to reach new records last month, according to the Bank's latest survey of households.

The MPC fears that recent steep increases in food and fuel prices will lead individuals and companies to expect higher inflation and that this will stoke up wage demands and encourage companies to raise prices, making this strengthening in inflationary pressure a self-fulfilling prophecy.

Those anxieties will be aggravated by the poll findings, which showed that the average expectation of inflation in a year's time among households jumped to 3.3 per cent in February from 3 per cent in November. It was the highest figure since the quarterly survey started in 1999.

Paul Dales, of Capital Economics, said: “The further rise will boost the MPC's fears that high inflation is becoming embedded in the system. This will clearly spook the MPC, increasing the chances that interest rates will remain on hold in April and perhaps even May too.”

Economists said that the jump in expectations of inflation may have been fuelled by the steep increases in prices charged by energy companies and supermarkets.

The MPC will be concerned that the most common prediction was for inflation of at least 5 per cent. The public's perception of current inflation was also a record. The average figure for the current inflation rate leapt to 3.9 per cent last month from 3.2 per cent in November and 2.8 per cent last August. Again, the most common prediction was 5 per cent-plus.

The survey showed that the public's satisfaction with the Bank dipped last month. The net proportion who said they were satisfied rather than dissatisfied fell to 30 per cent, the lowest since February 2000. It was 32 per cent last August.

Michael Saunders, UK economist at Citigroup, said that the rating of the Bank could have fallen further in the wake of the Northern Rock debacle. “So far the general public does not really seem to be blaming the Bank for the deterioration in the economy's prospects,” he said.

Pressure on the MPC to deliver early rate cuts is likely to be increased by evidence that the credit squeeze is continuing to push up borrowing costs for homebuyers.

Lending groups are demanding higher rates for new home loans despite the fall in base rates. The gap between rates charged on new two-year fixed-rate mortgages and two-year swap rates in the loan markets, which determine the cost of finance for lenders, rose last month to 1.21 percentage points, its highest for a decade.

Mr Saunders said that interest rates were rising more sharply for those seeking to borrow a high proportion of a property's value.

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