British businesses expect lower inflation

This could alleviate concerns among policymakers about the persistence of recent high price growth.

The Bank’s survey, which involved over 2,300 companies, revealed that businesses expect to increase prices by 5.1% over the next year, a decrease from 5.9% reported in the previous survey conducted in April.

The Bank’s survey also revealed that companies expect consumer price inflation to be higher in the next year, averaging at 5.9% compared to the 5.6% recorded in April. Additionally, three-year inflation expectations increased slightly from 3.4% to 3.5%.

Although consumer price inflation decreased last month to its lowest level since August, core inflation, which excludes volatile elements like food and energy, experienced its strongest growth since 1991. Core inflation provides a better understanding of the economy’s domestic inflationary pressures.

The Bank stated that companies anticipate a decline in output price inflation over the next year. Critics have accused consumer-facing companies of excessively raising prices to protect their profit margins, a phenomenon dubbed "greedflation."

However, recent data from the Office for National Statistics has cast doubt on this theory, as it showed that corporate profit margins remained stable at the end of the previous year. The Bank also stated that it has no evidence of significant margin increases by companies.