UK business leaders forecast inflation to fall over next 12 months
Despite positive outlooks for inflation and wage growth, climate change was the biggest cause of uncertainty for UK businesses.
The survey, which polled 2,230 CFOs from small, medium and large UK businesses in August, showed that realised output price inflation remained at 7.4% in the three months to August 2023.
Bank of England's Andrew Bailey: 'We are much nearer the top' of the hiking cycle
The data for August alone was also 7.4%, 0.4 percentage points lower than in July.
Looking ahead, business leaders had a generally more positive outlook, as they forecast year-ahead output price inflation to be 4.9% in the three moths to August, down from 5.2% in the three months to July.
This was in line with expected inflationary levels, which have been gradually decreasing over the last year, the BoE found.
One-year ahead CPI inflation expectations also fell to 4.8% in August from 5.4% in the previous month. A similar outlook was given for three-year ahead CPI inflation, which dropped slightly to 3.2% — 0.1 percentage points lower than in July.
Current CPI perceptions and annual CPI inflation both reported drops as well, as the former fell from 8.4% in July to 7.8% in August while the latter decreased from 7.9% to 6.8%.
Business leaders' wage growth expectations for the year ahead remained the same at 5%, while the three-month moving average decreased to 5.1% — a 0.1 percentage point fall.
The expectations were lower than the realised wage growth figure, the BoE said, which stood at 6.9% for both the month and the three months to August.
However, business leaders were still reporting high levels of uncertainty, the central bank found, with 53% of firms saying the overall uncertainty facing their businesses was high or very
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