Financial News: BoE DMP Survey Shows Firms Raise Year-ahead Output

BoE DMP Survey Shows Firms Raise Year-ahead Output Price Inflation Expectations

(RTTNews) - A Bank of England survey showed on Friday that businesses expect a bigger increase in their costs in the one year-ahead horizon but lowered their view on the consumer price inflation for the same period.

Firms raised their year-ahead own-price inflation expectation to 4.0 percent in the three months to May from 3.8 percent in the three months to April, results of the Decision Maker Panel survey showed. The expected output price inflation measure of 4.0 percent is the strongest since the February 2025 survey.

The DMP survey is conducted among Chief Financial Officers from small, medium and large UK businesses. The latest survey was carried out between May 8-22 May and received 2,086 responses. The DMP covers own prices from firms across the whole economy, not just consumer-facing firms.

Businesses' expectations for year-ahead CPI inflation increased to 3.7 percent in the three months to May from 3.5 percent in the previous survey in April.

Firms expect their wage growth to decelerate by 0.8 percentage points over the next 12 months as they reported the annual wage growth at 4.2 percent in the quarter-to-May period and the expect 3.4 percent growth for the year-ahead horizon, the survey showed.

The survey also revealed that 57 percent of firms expected to increase their prices over the next 12 months, down 7 percentage points since April, in response to the energy shock due to the Middle East conflict.

Further, 68 percent of firms expected their profit margins to be lower, same as in the April survey, and 24 percent expect wages to be higher, down 2 percentage points since April. Businesses also expect sales and employment to be lower than they would have been, on average.

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