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(Bloomberg) — UK firms expect to raise prices by 4% in the coming year, according to a Bank of England survey that suggests companies are trying to pass on higher energy costs to consumers.
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The reading, an average of the three months through May, was the highest since February last year, according to the BOE’s Decision Maker Panel survey.
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The figures are likely to shape the BOE’s thinking ahead of its next meeting on June 18. Policymakers are closely watching inflation expectations to gauge whether the energy shock triggered by the Iran war could lead to more persistent second-round effects.
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Several officials have expressed concern that corporate pricing power is proving stronger than expected as profit margins come under pressure.
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Wage growth remains under control, with the DMP survey showing businesses predict pay growth of 3.4% in the coming 12 months, unchanged from April’s reading.
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After the BOE’s Monetary Policy Committee voted with a majority 8-1 to hold interest rates in April, there are now signs of growing division.
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Megan Greene has indicated she may soon align with Chief Economist Huw Pill, who has been the only member to vote for a rate increase since the Iran conflict began. Others, including Governor Andrew Bailey have signaled they’re in no rush to raise rates given concerns about the weak state of the economy.
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Pay data is not yet reflecting the impact of the Middle East conflict as most wage settlements for 2026 have already been agreed at an average of around 3.5%, according to the BOE’s agents survey in April.
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