DMP Year-Ahead CPI Expectations

It is firms' forecast of economy-wide consumer inflation 1 year (12 months) ahead, not their own price plans. Respondents are chief financial officers (CFOs) and other senior finance leaders at UK businesses with 10 or more employees. The Bank of England (BoE), the UK central bank, runs it with King's College London and the University of Nottingham.

The sample covers private and third-sector employers across industries and sizes, mirroring the UK business population. It does not measure actual inflation, which the Office for National Statistics reports, nor household expectations. The publisher states no threshold for it; the Government's 2% target applies to actual inflation, not to this reading.

Responses come from around 2,500 firms, collected over about 2 weeks each month. Aggregates are usually published on the first Thursday of the next month, within about 10 days of closing, after policymakers see them. No intraday release time is given.

Each release brings a short summary and a monthly data file for selected series. A fuller quarterly file with industry detail follows the February, May, August and November policy reports. A detailed blog appears with the March, June, September and December decisions and the agents' business summary. No revision policy is stated; the publisher sets no trading rule and calls it one useful metric for sustainable inflation.

It comes from one direct question with three published CPI readings plus background context.

• Current CPI perceptions: what the firm thinks current annual UK CPI inflation is, used to check attentiveness.
• 1-year-ahead CPI expectations: what the firm expects annual UK CPI inflation to be in 1 year (12 months), the headline near-term gauge.
• 3-year-ahead CPI expectations: what the firm expects annual UK CPI inflation to be in 3 years, a check on longer-term anchoring.
• Own prices, costs, wages, jobs and uncertainty: background on activity and pressure, published alongside but not part of this gauge.

In the September 2022 survey, firms perceived current inflation at 10.2%, up from 9.6% in August. They expected 9.5% in 1 year (12 months), up from 8.4%, and 4.8% in 3 years. These results were published on October 6, 2022.

The October 2022 survey reversed course, with perceptions at 9.7% and 1-year expectations at 7.6%, down from 9.5%, and 3-year views at 4.0%. Those results were published on November 3, 2022. The 1.9-point spike unwound within one month, showing single-month readings can mislead. That is why the Bank headlines 3-month moving averages.

The publisher blames the 2022 surge mainly on labour shortages, supply disruption and energy input costs. Expectations turned down before actual CPI peaked at 11% in October 2022.

1. Ask (question E.1): Each firm answers in percent for current CPI and for CPI in 1 year and 3 years, with no probability ranges. Unlike the regular sales, price and employment questions, it uses no five-scenario format.
2. Weight: Responses are split into 14 industries and 2 size bands, giving 28 groups. The bands cover 10 to 249 and 250 or more employees, matched to the official business register. For example, a group with 10% of register employment and 10 respondents gives each firm a 1% weight, so no giant dominates.
3. Aggregate: The monthly value is the weighted mean, an average in which each answer counts by its weight. For example, answers of 2%, 3% and 4% with weights 1, 2 and 1 give (1x2 + 2x3 + 1x4) / 4 = 3.0%.
4. Smooth and report: The headline is the 3-month moving average, the mean of the 3 monthly weighted means. For example, months at 3.4% and 3.2% plus 3.0% give (3.4 + 3.2 + 3.0) / 3 = 3.2%.
5. Seasonal adjustment: No seasonal adjustment is applied; smoothing comes only from the 3-month average.