April 24 (Reuters) – British businesses ramped up their expectations for selling prices in the year ahead, according to a survey published by the Bank of England on Friday that added to a run of strong inflation signals from companies.
The BoE’s Decision Maker Panel showed companies in April expected price growth of 4.4% in the 12 months ahead, up from 3.7% in March and the highest reading since January 2024.
Two long-running business surveys on Thursday showed record increases in some of their gauges of company pricing, raising a question mark over BoE Governor Andrew Bailey’s view that businesses’ pricing power is limited, in part because of a weakening labour market and tepid demand.
Another survey produced by the central bank’s network of regional agents showed businesses seemed “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”.
Companies were also worried about weakness of demand, meaning they are likely to raise prices cautiously, the agents’ survey showed.
The Decision Maker Panel survey’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.
Expectations for consumer price inflation among companies for the next 12 months shot higher to 4.0% in April alone from 3.5% in March, the highest level since December 2023, although longer-term expectations were stable – something that will reassure members of the Monetary Policy Committee.
Wage growth expectations showed little change.
The BoE is expected to leave interest rates on hold on Thursday but investors, who expect between two and three quarter-point increases in borrowing costs this year, will be watching closely for any shifts in opinion among policymakers.
(Reporting by Andy BruceEditing by William Schomberg and Andrew Heavens)
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