UK businesses forecast inflation to ease - BoE

7th Mar 2024 11:26

(Sharecast News) - UK businesses expect output inflation to continue easing over the coming year, a Bank of England survey showed on Thursday.

According to the latest Decision Maker Panel survey of chief financial officers, output prices rose by 5.4% on average in the three months to February, down from January's 5.6%.

Year-ahead own-price inflation, meanwhile, was expected to be 4.3% in the three months to February, unchanged on the previous three months.

As a result, output inflation is expected to decline by 1.1 percentage points over the next year, based on three-month averages.

Expectations for one-year ahead consumer price inflation fell to 3.3% from 3.4% in January.

Employment expectations, meanwhile, were little changed. Respondents reported annual employment growth of 2.3%, marginally below the 2.4% seen in the previous three months.

Looking ahead, expected year-ahead employment growth was 1.6%, down 0.1% and in line with indications that the job market is cooling.

Year-ahead wage growth remained unchanged at 5.2%. Wage growth was 6.7% in February, a 0.1 percentage point dip on the three months to January.

The DMP was set up by the BoE in conjunction with academics from Stanford University and the University of Nottingham in 2016.

Designed to be representative of all UK businesses, it is closely-watched by policymakers to gauge businesses price and wage expectations.

The latest survey was conducted between 2 and 16 February, with 2,373 responses. Respondents work across small, medium and large businesses and in all sectors.