Key facts
- UK businesses expect price growth of 3.9% in the next 12 months, down from 4.1% previously.
- Year-ahead wage growth expectations have decreased to 3.4%.
- Realised annual own-price growth was 3.8% in the three months to May.
- Firms expect their own-price growth to increase to 4.0% over the next year.
- 57% of firms anticipate increasing their prices, and 68% expect lower profit margins.
British businesses are planning to implement smaller price increases and wage hikes in the upcoming year, according to the Bank of England's latest Decision Maker Panel survey. The survey, conducted in the three months to July, indicated that firms expect price growth of 3.9% over the next 12 months, a slight decrease from the 4.1% recorded in the previous period. Expectations for year-ahead wage growth also saw a marginal decline to 3.4%.
The May 2026 data from the same panel showed realised annual own-price growth at 3.8%, with expectations for year-ahead own-price inflation at 4.0%. Firms also reported annual wage growth of 4.2% in the three months to May, while expected year-ahead wage growth remained at 3.4%. Looking ahead, 57% of firms anticipate increasing their prices, and 68% foresee lower profit margins due to recent energy shocks.
This moderation in business pricing and wage expectations is likely to be viewed favorably by the Bank of England, which closely monitors these indicators for inflation trends. The central bank is widely expected to maintain its current interest rate policy at its upcoming meeting.