Over the next year, businesses expected their output prices to increase by an average of 5.3%, down 0.1 percentage points from the previous month. The three-month average also fell by 0.1 percentage points to 5.5%, which is now 1.1 percentage points below its peak from September. Note that the DMP covers own prices from firms across the whole economy, not just consumer-facing firms.
In March, one-year CPI inflation expectations also fell slightly. DMP members expected CPI inflation to be 5.8% one-year ahead, down from 5.9% in February. Three-year ahead CPI inflation expectations ticked up from 3.4% in February to 3.5% in March.
Expected year-ahead wage growth fell by 0.1 percentage points to 5.6% in March. Realised annual wage growth fell by a similar amount to 6.5%.
The average effective interest rate on all borrowing (both bank and market based) was reported to be 5.8% in March, 2.3 percentage points higher than at the end of 2021. Respondents expected their borrowing rates to increase by a further 0.25 percentage points over the year-ahead.
Overall business uncertainty continued to decline in March. 47% of firms reported that the overall level of uncertainty facing their business was high or very high, down from 53% last month. Uncertainty around the outlook for businesses’ expectations for their own-price growth also fell back, although it remains close to historically high levels.
The DMP was set up in August 2016 by the Bank of England together with academics from Stanford University and the University of Nottingham. It was designed to be representative of the population of UK businesses. All results are weighted. See Bloom et al (2017) for more details.
The DMP receives funding from the Economic and Social Research Council.