UK firms expect 3.7% price growth and 3.4% pay growth, BoE panel finds

Victoria Shinder03 October 2026, 13:072 min read

UK businesses' expectations for prices and pay barely moved in September, according to the Bank of England's monthly Decision Maker Panel (DMP), published on 2 October. The survey of chief financial officers at small, medium and large firms ran from 4 to 18 September and drew 1,993 responses.

Prices. Firms reported that their own prices rose 3.7% over the past year in the three months to September, unchanged from the three months to August. They expect a further 3.7% over the next year, 0.1 percentage points below the previous reading — in other words, no slowdown in the prices they charge. The DMP covers firms across the whole economy, not only consumer-facing ones.

Inflation expectations. Firms' expectations for CPI inflation one year ahead stayed at 3.1%, and three years ahead at 2.8%. Both are above the Bank's 2% target, and neither changed from August.

Pay and jobs. Reported annual wage growth was 4.0%, unchanged. Firms expect pay growth of 3.4% over the next year, also unchanged, which implies a slowdown of 0.6 percentage points. Employment fell 0.2% over the past year, the same as in August, while expected employment growth for the next year edged up by 0.1 points to 0.2%.

The energy shock. Since April the DMP has asked how firms expect the recent rise in energy costs to affect them over the next 12 months. Higher prices and thinner margins remain the most common responses. In September, 57% of firms expected to raise prices — 7 percentage points fewer than in April and 2 fewer than in August — while 7% expected to cut them. Seventy per cent expected lower profit margins, 2 points more than in April.

| Measure (3-month average) | August | September | |---|---|---| | Own-price growth, past year | 3.7% | 3.7% | | Own-price growth, year ahead | 3.8% | 3.7% | | CPI expectation, 1 year | 3.1% | 3.1% | | CPI expectation, 3 years | 2.8% | 2.8% | | Wage growth, past year | 4.0% | 4.0% | | Wage growth, year ahead | 3.4% | 3.4% |

The next DMP release is due on 30 October.

What it means

The DMP is one of the gauges the Monetary Policy Committee watches for second-round effects of the energy shock. September's answer is that firms are still passing costs on, though slightly fewer each month, and that their expectations for inflation are holding above target rather than drifting further up. It gives both sides of the MPC's current argument something to point to, and settles neither.