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Bank Of England · Business Survey · Inflation · UK Economy
U.K. businesses, surveyed by the Bank of England (BOE) in May, anticipate raising prices by 4% over the next 12 months, an increase from April's 3.8% expectation, while projected wage growth is expected to slow significantly to 3.4% from 4.2% reported in the year to May.
The BOE polled 2,086 chief financial officers between May 8 and 22, following a notable jump in energy prices after attacks on Iran in late February. This expected acceleration in price increases concerns BOE policymakers, who are scheduled to meet later this month and are expected to maintain their key interest rate at 3.75%.
Although the U.K.'s inflation rate fell to 2.8% in April from 3.3% in March, this was largely due to one-off government measures. BOE officials expect inflation to push higher in the coming months.
The survey indicates businesses are reluctant to fully absorb higher costs from energy or wage demands; 57% plan price increases due to the Middle East conflict, yet 68% expect lower profit margins, suggesting a squeeze on corporate profitability.
