UK Firms Hold Price Rise Expectations After Iran War De-escalation: BoE Survey
Bank of England Survey Reveals Persistent Price and Wage Pressures
LONDON, July 3 (Reuters) - British businesses showed no sign of easing their price expectations in June despite a de-escalation of the Iran war that had sent energy costs surging, a Bank of England survey showed on Friday.
Rising Price Expectations Among UK Firms
The BoE's Decision Maker Panel showed firms expected their prices to rise 4.1% in the year ahead in the three months to June, up from 4.0% in May and the highest since early 2024, suggesting the energy price shock had yet to release its grip on corporate pricing plans.
Price expectations were unchanged at 4.0% on a one-month basis.
Wage Growth and Interest Rate Outlook
Expected year-ahead wage growth rose 0.1 percentage points to 3.5% in the three months to June.
The BoE held interest rates in June and is closely monitoring how higher energy costs feed into inflation through price rises and wages.
Market Reactions and Inflation Expectations
"A hawkish-tilting DMP survey will keep the MPC on track for an extended rate hold, with risks of a hike still higher than those of a cut," Rob Wood, chief UK economist at Pantheon Macroeconomics, said.
Financial markets view an interest rate hike by the end of this year as more likely than not, although the first quarter-point hike in interest rates is only fully priced in for April 2027.
Consumer Price Inflation Expectations
The BoE said expectations for consumer price inflation among companies for the next 12 months fell to 3.3% in June alone from 3.7% in May on a single-month basis, the level since February before the conflict started.
Longer-term expectations held at 2.9% on a single-month basis.
Survey Details
The survey was conducted between June 5 and June 19.
(Reporting by Suban Abdulla, editing by Andy Bruce)
