UK firms lift price predictions for coming year, BoE survey shows

(Sharecast News) - UK businesses have raised their predictions for price hikes over the coming year, according to results of a survey of CFOs released on Friday by the Bank of England. The Decision Maker Panel (DMP), a survey of over 2,000 CFOs from small, medium and large UK businesses that took place between 8 and 22 May, revealed that firms's prices over the three months to May were 3.8% ahead of last year.

However, their year-ahead own-price inflation projections rose to 4.0%, up 0.2 percentage points from 3.8% according to last month's survey.

At the same time, annual wage growth eased to 4.2% during the three months to May, down from 4.3% the previous month, while expected year-ahead wage growth held steady at 3.4%.

"This implies that firms expect their wage growth to decline by 0.8 percentage points over the next 12 months," the survey said.

When asked about how the recent energy shock is expected to affect their business over the next 12 months, 57% of firms predicted increasing their prices, while 68% expect their profit margins to take a hit. Both sales and employment are also expected to be lower than they would have been, the BoE said.