Prices and wages set to rise in 2025 - BofE survey
Firms expect to put up prices in 2025, a survey showed on Thursday, as they juggle a raft of fresh costs, including increased National Insurance contributions.
According to the latest Decision Maker Panel survey from the Bank of England, businesses price growth expectations for the year ahead rose slightly to 4% , up from November’s 3.8%.
Wage growth expectations also nudged higher, up 0.1 percentage point to 3.9%.
Expectations for consumer price index inflation rose to 2.8% from 2.7% in the three months to December.
Businesses are facing a number of cost increases in 2025, including higher employer NI contributions and a hike to the National Living Wage. Interest rates are still widely forecast to fall, but not at the same pace as anticipated earlier in 2024.
The monthly survey of chief financial officers asked specifically about how they would respond to the upcoming increase in costs, which were announced in the Budget.
On average over the November and December surveys, 54% said they would raise prices, 53% said lower employment and 39% cited paying lower wages than they otherwise would have done.
A total of 61% also expected lower profit margins.
The survey of finance chiefs at small, medium and large UK businesses was conducted between 6 and 20 December. A total of 2,346 responses were received.