The results of the DMP survey showed that annual inflation expectations of British companies fell slightly in February, with wage growth expectations reaching their lowest level since June 2022.
The Decision Maker Panel (DMP) is a survey of Chief Financial Officers from small, medium and large UK businesses. The central bank uses it to monitor developments in the economy and to track businesses’ views. The February DMP survey was conducted between 8 and 22 March and received 2,422 responses.
The data showed that annual inflation expectations of companies fell by 0.1% compared to February, to 3.2%. The three-month average fell by 0.3%, to 3.3% in March. Three-year ahead CPI inflation expectations fell by 0.1%, to 2.7% in the three months to March. Meanwhile, expected year-ahead wage growth declined to 4.9% on a three-month moving-average basis. Annual wage growth was 6.4% in the three months to March, down 0.3% from the three months to February. Firms therefore expect their wage growth to decline by 1.5% over the next 12 months based on three-month averages.
The survey also found that over the next year firms expect the average interest rate on their borrowing to decline to 6.2%, but this still remains significantly higher than the interest rate of 3.6% at the end of 2021.