UK firms lower expected price increases to 3.7% over next year: BoE survey

“Businesses therefore expect output price inflation to be unchanged over the next year, based on three-month averages,” the Bank of England said in its September 2026 DMP release.

Firms reported that their actual annual price growth also stood at 3.7 per cent in the three months to September, unchanged from the previous period.

Wage growth showed a similar trend. Firms reported annual wage growth of 4.0 per cent in the three months to September, while their expectations for wage growth over the next year remained at 3.4 per cent.

“This implies that firms expect their wage growth to decline by 0.6 percentage points over the next 12 months,” the release said.

However, higher energy costs continued to weigh on businesses. In September, 57 per cent of firms said they expected to increase prices due to higher energy costs. This was down seven percentage points from April and two percentage points from August.

At the same time, 70 per cent of firms said they expected the energy shock to reduce their profit margins, up two percentage points from April. This indicates that businesses expect to absorb some of the higher costs instead of passing the full impact on to consumers through higher prices.

Employment conditions remained weak. Firms reported annual employment growth of minus 0.2 per cent in the three months to September, unchanged from August. However, expectations for employment growth over the next year improved slightly to 0.2 per cent.

The survey was conducted between September 4 and 18 and received responses from 1,993 UK businesses.

The Decision Maker Panel is operated by the Bank of England in collaboration with King’s College London and the University of Nottingham. (ANI)

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