British businesses signalled stronger near-term inflation expectations as energy prices moved higher, according to the Bank of England's monthly Decision Maker Panel survey published on Thursday.
The survey of chief financial officers from small, medium and large UK companies found that year-ahead own-price inflation expectations rose to 3.5% for the three months to March. That is 0.1 percentage points higher than the three months to February. Looking at single-month data, the increase was more pronounced: expectations climbed from 3.4% in February to 3.7% in March.
The Bank of England, which runs the Decision Maker Panel jointly with King’s College London and the University of Nottingham, attributed the shift to firms adjusting their outlooks "as a result of the recent increases in energy prices." The statement ties the rise in firms' price expectations directly to movements in energy costs reported over the survey period.
Uncertainty among firms also rose notably. In March, 57% of respondents said the overall level of uncertainty facing their business was high or very high, an increase of 10 percentage points from February. The single-month data also showed a rise in uncertainty about year-ahead prices.
Measured realised annual own-price growth edged down slightly to 3.7% in the three months to March, a 0.1 percentage point decline from the comparable three months to February. The survey emphasised that its coverage spans firms across the whole economy and is not limited to consumer-facing businesses.
Turning to consumer price expectations, the survey found that year-ahead CPI inflation expectations were unchanged when viewed as three-month averages. However, in the single-month March data year-ahead CPI expectations increased by 0.5 percentage points to 3.5%, a move the Bank again linked to rising energy prices. Expectations for CPI three years ahead stood at 2.7% in the three months to March, down 0.1 percentage points from the three months to February, though the single-month figure for that horizon rose by 0.1 percentage points.
On the labour side, firms reported realised annual employment growth of -0.3% in the three months to March, a deterioration from -0.2% in the three months to February. Looking ahead, firms' expectations for employment growth over the next year remained unchanged at 0.1% in the three months to March.
The March 2026 edition of the Decision Maker Panel was carried out between March 6 and March 20 and received 2,004 responses. The Bank noted that the DMP has been running since August 2016 and that all results are weighted to be representative of the UK business population. The survey receives funding from the Economic and Social Research Council.
Overall, the latest DMP round shows firms revising their one-year price outlooks upwards in line with recent energy price moves, while broader uncertainty and short-term monthly indicators also point to increased volatility in business expectations.