People feel like they are under more pressure from rising food, petrol and energy prices than they really are, a new report shows.

And their view of inflation is almost double the actual level it is running at, the Bank of England's quarterly inflation survey found.

The average person questioned in the poll said inflation is at 3.9% - but the Consumer Price Index benchmark rate only stands at 2.2% at the moment.

The difference is a record high for the survey, and is set to cause concern among the Bank's nine-strong Monetary Policy Committee about higher expectations feeding into wage demands.

The MPC sets interest rates, and is charged with keeping inflation around the Government's target of 2%.

The public also believe the rate of inflation will be 3.3% on average over the coming year, which is another record for the report.

The figures come as consumers have been hit with price rises by all but one of the big six domestic energy firms.

Record oil prices have also pushed up costs at the petrol pumps, although there was some relief for motorists as Alistair Darling postponed a planned 2p-a-litre rise in fuel duty in his Budget until October.

But that has failed to stop the price of a gallon of petrol reaching the £5 mark, while food costs have also been rising at their fastest rate for more than 20 years.

The CPI measure of inflation also ignores mortgage repayments, and millions of homeowners are facing more expensive borrowing costs from lenders following the credit crunch.

Some analysts now believe the heightened perceptions about the cost of living could even deter the MPC from cutting interest rates again in the near future.

Paul Dales, from Capital Economics, said: "This will clearly spook the MPC, increasing the chances that interest rates will remain on hold in April and perhaps even May too."

The survey of almost 4,000 people also shows public satisfaction with the Bank of England's inflation-controlling job remaining at its lowest point since May 2000.

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