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British Companies Lower Expectations for Selling Price Increases, but Wage Growth Remains High: Bank of England Survey

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UK Businesses Expect Lower Selling Price Increases, But Maintain High Wage Growth Forecasts

British companies have lowered their expectations for selling price increases over the last three months, while forecasts for wage growth remain high, according to a survey conducted by the Bank of England (BoE). The findings present a mixed picture of inflationary pressure in the country.

The BoE Decision Maker Panel, published on Thursday, revealed that businesses surveyed in the three months leading up to September anticipated selling prices to rise by 4.8% in the coming year. This figure is slightly lower than the previous three-month period, which saw expectations for selling price increases at 5.0%. However, the survey also indicated that forecasts for wage growth in the year ahead remained unchanged at 5.1%.

The results of the survey suggest that while companies are relatively optimistic about wage growth, they are more cautious about raising prices for their products or services. This may reflect concerns about consumer spending power and the potential impact of Brexit on the economy.

The BoE Decision Maker Panel is a quarterly survey that aims to gauge the sentiment and expectations of businesses across the UK. It provides valuable insights into economic trends and helps the central bank formulate its policies accordingly.

The central bank closely monitors inflation, as it plays a crucial role in setting interest rates. By surveying businesses, the BoE can gather valuable information about price and wage expectations, which can influence its decision-making process.

It is worth noting that the survey was conducted during a period of heightened uncertainty due to the ongoing Brexit negotiations. The possibility of a no-deal Brexit and the potential disruption it may cause to trade and supply chains could be weighing on businesses’ pricing decisions. Additionally, concerns about a slowdown in global economic growth may also be influencing companies’ expectations.

While the lower expectations for selling price increases may provide some relief for UK consumers, who have been grappling with rising living costs, the sustained high forecasts for wage growth indicate that businesses remain optimistic about the country’s economic prospects. Higher wages can potentially boost consumer spending and support economic growth.

As the UK approaches its deadline for leaving the European Union on October 31, the BoE will continue to closely monitor economic indicators and adjust its policies accordingly. The survey results are just one piece of the puzzle in assessing the overall health of the UK economy.

The mixed picture of inflationary pressure portrayed by the survey reflects the uncertainty and challenges faced by businesses in the current economic climate. It is a reminder of the complexity of balancing price increases and wage growth, as companies strive to remain competitive while also considering the impact on consumers.

Overall, the survey highlights the delicate balancing act that businesses are engaged in. It underscores the need for policymakers to carefully manage inflation and provide stability to support the UK economy in these challenging times.

More detail via Reuters here… ( Image via Reuters )

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