Firms see prices rising a little faster

British businesses expect the prices they charge to rise slightly faster over the coming year, while wage growth is expected to cool, according to the Bank of England's Decision Maker Panel published on 30 October 2026. The survey, run between 2 and 16 October with 1,945 chief financial officers responding, found firms expected their own prices to rise by 3.8% over the next 12 months, up from 3.7% in the previous reading. Prices already charged had risen by 3.8% in the year to October. Expectations for consumer price inflation also edged up, to 3.3% a year ahead, from 3.1% in September.

Pay expectations ease, jobs picture softens

Wage growth told a cooler story. Firms reported pay rising by 3.9% in the year to October, down from 4.0% in September, and expected wage growth of 3.4% over the next year, unchanged from the prior reading, implying a slowdown of half a percentage point over the coming 12 months. A separate Bank survey of its regional agents put expected pay settlements for 2027 at around 3.6%, broadly similar to this year. Employment growth remained weak, with firms reporting a 0.5% fall in the year to October and expecting only 0.2% growth ahead.

What it means for next week's rate decision

The findings land days before the Bank's policymakers meet to set interest rates, with markets widely expecting a rise from 3.75% to 4%. Officials watch price-setting and pay closely for signs that higher energy costs, linked to the war in the Middle East, are feeding into a lasting wage-price spiral. The survey found 68% of firms expected the energy shock to push their prices higher over the next year, while 71% in the wider reporting expected profit margins to fall. For now, the panel suggests price pressure has not yet faded, but pay pressure is not accelerating, a mixed picture that leaves the rate decision finely balanced.

Sources: Bank of England | Morningstar / Dow Jones