The latest Bank of England (BoE) Decision Maker Panel (DMP) quarterly survey released on Thursday showed that “one-year ahead expected CPI inflation by the UK firms increased by another 0.1 percentage points to 2.8% in the quarter to December.”
Key takeaways
Year-ahead own-price inflation expected to be 3.8% in the three months to December, 0.1 percentage points higher than firms reported in the three months to November.
Firms’ expectations for CPI inflation a year ahead rose from 2.7% to 2.8% in the three months to December.
Firms’ expected year-ahead wage growth remained unchanged at 4.0% on a three-month moving-average basis in December.
Asked about National Insurance contributions (NICs) rise, 61% of firms expect to lower profit margins, 54% expect to raise prices, 53% expect lower employment and 39% expect to pay lower wages.
The survey is one of the most closely watched by members of the BoE’s Monetary Policy Committee (MPC).
Market reaction
At the press time, GBP/USD is off 14-month lows of 1.2239 but remains heavy below 1.2300.
Source: https://www.fxstreet.com/news/boe-dmp-survey-uk-firms-inflation-expectations-increase-to-28-in-the-december-quarter-202501090940