UK Businesses Expect Prices to Rise by 3.7% Over Next Year
The Bank of England's latest survey shows that UK businesses expect prices to rise by 3.7% over the next year, slightly lower than their previous estimate. This is according to the Decision Maker Panel (DMP) survey, which measures how much firms expect their selling prices to increase. The year-ahead own-price inflation stood at 3.7% in the three months to September, a decrease of 0.1 percentage point from the previous period.
Broader inflation expectations remained stable, with businesses expecting consumer price inflation (CPI) to be 3.1% one year ahead and 2.8% three years ahead. Wage growth also showed a similar trend, with firms reporting annual wage growth of 4.0% in the three months to September.
However, higher energy costs continued to weigh on businesses, with 57% of firms expecting to increase prices due to higher energy costs. This is down seven percentage points from April and two percentage points from August. At the same time, 70% of firms said they expected the energy shock to reduce their profit margins.
The survey was conducted between September 4 and 18 and received responses from 1,993 UK businesses. The Decision Maker Panel is operated by the Bank of England in collaboration with King's College London and the University of Nottingham.