UK Firms Expect 3.8% Price Rises and 3.6% Pay Settlements, Bank of England Business Surveys Show
UK businesses expect to raise their own prices by 3.8% over the next year and 68% plan price rises because of the energy shock, the Bank of England's Decision Maker Panel found. Its Agents report early signs that 2027 pay settlements will average around 3.6%.
By Entrepreneur Group · Published
UK firms expect to keep raising prices at about the same pace next year. Businesses in the Bank of England's Decision Maker Panel expect their own prices to rise by 3.8% over the next 12 months, and 68% expect to raise prices in response to the energy shock, according to results published on 30 October 2026. A separate Agents' summary of business conditions found that pay settlements averaged 3.6% in 2026, with early signs that 2027 will be broadly similar.
Both reports feed into the Monetary Policy Committee's November decision, which is due on 5 November.
Prices: firms expect no let-up
The Decision Maker Panel surveyed 1,945 businesses between 2 and 16 October. Its main price findings were:
- Own-price growth over the past year: 3.8% in the three months to October, up 0.1 percentage points on September.
- Expected own-price growth over the next year: also 3.8%, up 0.1 percentage points. The Bank says businesses "therefore expect output price inflation to be unchanged over the next year".
- Expected CPI inflation: 3.3% a year ahead, up from 3.1%, and 2.8% three years ahead, unchanged.
The panel has asked firms about the energy shock since April. In October, 68% expected to raise prices as a result, 11 points more than in September, while only 3% expected to lower them. And 71% expected lower profit margins.
The Bank's Agents, who speak to businesses around the UK, found the same pressure. They report that consumer price inflation "continues to edge up", driven by energy-related input costs, especially those linked to the Middle East conflict, while weak demand and competition are limiting how much firms can pass on. Domestic manufacturers and business services firms mostly report price rises of 2% to 5%, and margins remain compressed. Food inflation is expected to end 2026 at 3% to 4% and rise in the first half of 2027.
Pay and hiring
On wages, Decision Maker Panel firms reported annual wage growth of 3.9% in the three months to October, and expect 3.4% over the next year. Realised employment growth was negative, at -0.5%, while firms expect headcount to grow by 0.2% over the next year.
The Agents put the average 2026 pay settlement at 3.6%. Most contacts who have given an estimate for 2027 expect about 3.6% again, though many have not yet set a figure. Union demands and skills shortages are pushing up, while a looser labour market and weak demand are pushing down. The Agents found no evidence of a late-year premium for inflation.
Employment intentions were "slightly firmer than last round" but below normal, with large firms more positive. The Agents also note that AI is reducing replacement hiring and trainee intakes more than it is causing outright job losses.
Investment and credit
Investment intentions are "slightly positive for the year ahead, though from a low starting point", the Agents say. Technology spending is the main driver for business services firms, while many manufacturers are cutting investment outside automation, defence and aerospace.
For founders looking for finance, the Agents report that "credit remains widely available" and lenders are competing strongly. Credit quality is broadly stable, with stress concentrated in leveraged hospitality, construction and their supply chains.
What it means for founders
This section is editorial guidance. If you are setting prices for 2027, these surveys suggest many of your suppliers expect to keep raising theirs by 3% to 5%, so it may be worth building that into quotes and contracts now. For pay, a settlement of around 3.6% is what many larger employers expect, which gives a useful reference point, alongside the National Living Wage rise to £13.21 in April 2027 if you employ lower-paid staff.
Frequently asked questions
How much are UK businesses raising prices in 2026?
Firms in the Bank of England's Decision Maker Panel reported own-price growth of 3.8% in the three months to October 2026 and expect the same 3.8% over the next year.
What pay rise do UK employers expect for 2027?
The Bank of England's Agents found 2026 pay settlements averaged 3.6%, and most contacts who have given an estimate expect about 3.6% in 2027.
Is it hard for small businesses to get credit?
The Bank of England's Agents report that credit remains widely available and lenders are competing strongly, although demand for borrowing is mixed and cautious.
Sources
- Bank of England: Decision Maker Panel, October 2026 (30 October 2026) (reviewed 3 November 2026)
- Bank of England: Agents' summary of business conditions, October 2026 (30 October 2026) (reviewed 3 November 2026)
- Bank of England: Latest and upcoming publications (reviewed 3 November 2026)