London, United Kingdom. British businesses increased their expectations for selling price growth over the next 12 months in April, according to a Bank of England survey published on Friday. The findings added to a series of signals from companies pointing to persistent inflation pressures.
Selling price expectations rise
The Bank of England’s Decision Maker Panel showed companies expected price growth of 4.4 per cent in the 12 months ahead in April, up from 3.7 per cent in March and the highest reading since January 2024.
Surveys point to pricing pressure and cautious increases
Two long-running business surveys published on Thursday showed record increases in some measures of company pricing, raising questions over Bank of England Governor Andrew Bailey’s view that businesses’ pricing power is limited due in part to a weakening labour market and tepid demand.
A separate survey from the central bank’s network of regional agents said businesses appeared “minded to pass on at least some of the cost rises that have or are expected to come through, because their profit margins are already squeezed”. The agents’ survey also found companies were concerned about weak demand, suggesting they are likely to raise prices cautiously.
Sales growth expectations fall; inflation expectations rise
The Decision Maker Panel’s gauge of expected sales growth in the year ahead fell to its lowest level since July 2020, when the COVID-19 pandemic was in full swing.
Companies’ expectations for consumer price inflation over the next 12 months rose to 4.0 per cent in April from 3.5 per cent in March, the highest level since December 2023. Longer-term inflation expectations were stable, something expected to reassure members of the Monetary Policy Committee. Wage growth expectations showed little change.
Rate decision in focus
The Bank of England is expected to leave interest rates on hold on Thursday, while investors who expect between two and three quarter-point increases in borrowing costs this year will be watching for any shifts in policymakers’ views.
What do you expect the Bank of England to signal about inflation risks at its next interest rate decision?
