UK Firms Tame Price Expectations Amid Cost of Living Worries

According to new research from the Bank of England, firms in the UK plan to raise prices at a slower pace than many economists predicted. The Bank's Decision Makers' Panel survey found that businesses intend to increase prices by 3.6% over the next year, which is below the consensus forecast of 3.9%. This development may ease some concerns about a deepening cost of living crisis.

The one-year ahead CPI inflation expectations edged up slightly to 3.1%, but still matched predictions made by economists in advance of the release. Rob Wood, economist at Pantheon Macroeconomics, described the latest data as 'fractionally dovish,' saying it could help soften worries about a spike in inflation.

Bond yields have been sensitive to signals from the Bank of England about interest rates, and despite some fluctuations, the market remains vigilant. The Monetary Policy Committee retains time to monitor price pressures before making its next policy move.