68% of firms expect to raise prices in response to the recent energy shock, Bank of England survey finds
The share jumped 11 points in a month, while firms' expected inflation rate for the year ahead rose to 3.3%. Next week the Bank's rate-setters publish their November decision.
By Daily Oracles News Team1 min read
More UK businesses now expect to pass the energy shock on to customers. In the Bank of England's October Decision Maker Panel, published on Friday, 68% of firms said they expected to raise prices as a result over the next 12 months. That is 11 percentage points higher than in September and 4 points higher than in April, when the question was first asked. Only 3% expected to lower prices.
Firms also expect the shock to eat into profits. Some 71% expected lower margins, similar to September and 3 points above April.
The panel is a monthly survey of chief financial officers at small, medium and large UK firms. This round ran from 2 to 16 October and drew 1,945 responses, so it closed before the Budget on 28 October.
Prices and pay
In the three months to October, firms reported raising their own prices by 3.8% over the past year, a touch higher than the month before. They expect to raise them by the same 3.8% over the next 12 months.
Inflation expectations moved up. Firms now expect CPI inflation of 3.3% a year from now, compared with 3.1% in the previous reading. Their view three years out did not change, at 2.8%.
Pay is heading the other way. Annual wage growth was 3.9%, down 0.1 points, and firms expect it to slow to 3.4% over the next year, a fall of 0.5 points.
Fewer jobs
Employment at surveyed firms fell 0.5% over the past year, a bigger drop than the 0.2% fall reported in the three months to September. Firms expect headcount to grow by 0.2% over the coming year, unchanged from last month.
The Bank's Monetary Policy Committee publishes its next summary and Monetary Policy Report on 5 November. The next Decision Maker Panel data follows on 4 December.
