TD Securities strategists highlight that the June United Kingdom (UK) Decision Maker Panel (DMP) survey shows one‑year inflation expectations easing while three‑year expectations stay near 3%. Despite lower near‑term inflation views, firms’ price‑setting intentions and expected wage growth have edged higher. They argue these shifts are too small to alter most Monetary Policy Committee (MPC) members’ preference to hold rates in July, suggesting a slower pass‑through from lower energy prices to corporate expectations.

DMP survey hints at sticky pricing

"The June DMP survey shows inflation expectations eased on a 1y basis to 3.3% (down from 3.7% in May), but the 3y measure remained steady at 2.9% (up from 2.7% pre-conflict)."

"And though businesses reported lower 1y inflation expectations, their own price setting intentions over the next year remained at 4.0% (and ticked up to 4.1% on a 3m smoothed basis)."

"Expected wage growth also moved up a touch from 3.4% in May to 3.5% in June."

"Ultimately, these moves are not large enough to shift the majority of the MPC members from a hold vote in July, but they could suggest that easing energy prices could take a bit longer to filter through to firms' expectations in the UK."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)