DMP 1-Year CPI Expectations
A Bank of England business-survey measure of the UK CPI inflation rate firms expect one year ahead.
Full explanation
DMP 1-Year CPI Expectations show the inflation rate that UK businesses expect for the Consumer Prices Index over the following 12 months. The measure comes from the Bank of England's Decision Maker Panel survey of businesses across the UK economy. Results can be reported as a single-month reading and as a less volatile three-month average, reflecting firms' views rather than an official forecast of future inflation.
Why traders watch it
Business inflation expectations are relevant to the outlook for price-setting, wage demands and Bank of England monetary policy. Sterling and UK rate markets may react when the result materially changes views on the persistence of inflation.
Market interpretation
- GBP
- A material surprise may alter perceptions of UK inflation persistence and the likely monetary-policy path.
- UK government bonds and interest-rate markets
- The result can affect expectations for future Bank of England policy rates, particularly when it confirms or challenges other inflation evidence.
Stronger vs weaker outcomes
A higher-than-expected reading may be interpreted as a sign that businesses expect firmer future consumer-price pressure, while a lower-than-expected reading may be interpreted as evidence of softer expected inflation. The reaction can depend on whether the move is broad based, persistent and consistent with other DMP measures such as expected own-price and wage growth.
A higher reading may suggest that businesses expect stronger CPI inflation over the next year, which markets may view as a sign of more persistent price pressure.
A lower reading may suggest that businesses expect softer CPI inflation over the next year, which markets may view as a sign of easing price pressure.
Higher expected CPI inflation can point to firmer anticipated price pressure; lower expected CPI inflation can point to softer anticipated pressure.
Typical volatility
Moderate. This is a survey-based expectations measure, not the official CPI inflation outturn. Single-month results can be volatile, and the three-month average may give a different signal.
Trading considerations
- Distinguish the single-month result from the three-month average before assessing the change.
- Compare the CPI expectation measure with DMP expected own-price growth and expected wage growth.
- Review the survey period and response coverage, as they affect how current the signal is.
- Treat the measure as forward-looking survey evidence rather than as an official CPI release.
Educational guidance only — never a trading signal or recommendation.
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