The results of the DMP survey showed that annual inflation expectations of British companies fell slightly in February, but expectations for wage growth remained unchanged.
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 2 and 16 February and received 2,373 responses.
The data showed that annual inflation expectations of companies increased by 0.1% compared to January, to 3.4%. The three-month average fell by 0.3%, to 3.6% in February. Three-year ahead CPI inflation expectations fell by 0.1%, to 2.8% in the three months to February, Meanwhile, expected year-ahead wage growth remained unchanged at 5.2% on a three-month-moving-average basis. Annual wage growth was 6.7% in the three months to February, down 0.1% from the three months to January. 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 5.8%, but this still remains significantly higher than the interest rate of 3.6% that firms had previously reported paying at the end of 2021.