UK Business Inflation Expectations Rise to 3.3% as North Sea Output Declines
Key Facts
UK companies’ expectations for consumer price inflation a year ahead rose to 3.3% in the three months to October 2026, from 3.1% in the three months to September, according to a Bank of England survey published on October 30. The survey puts expected inflation on an upward path in the latest period, while companies’ inflation expectations three years ahead remained at 2.8%. By contrast, expected annual wage growth held steady at 3.4% in the three months to October. The bank said, "Consumer price inflation expectations one year ahead rose to 3.3% in the three months to October, from 3.1% in the three months to September." The figures come as Britain heads into renewed debate over oil and gas revenues and North Sea output.
The survey data indicate that the latest rise in inflation expectations was not accompanied by a change in companies’ wage or longer-term inflation expectations. Wage growth expectations one year ahead remained at 3.4%, unchanged in the three months to October, while the measure of expected inflation three years ahead stayed at 2.8% compared with the corresponding period to September. The Bank of England said the three-year measure "was unchanged compared with the three months to September." The divergence offers a picture of companies’ expectations across different time horizons: inflation expectations for the coming year rose, while longer-term indicators and expected wages remained stable. The October release was based on companies’ responses between October 2 and 16.
In the energy sector, the Office for Budget Responsibility expects offshore oil and gas production tax revenues to reach 5.1 billion pounds in fiscal year 2026-27, up 25% from the previous year, attributing the increase to higher oil and gas prices. The revenues include offshore corporation tax, petroleum revenue tax and the Energy Profits Levy. Britain’s 2026 budget estimated that legislation would give the oil and gas sector certainty to continue investing in the North Sea, while taxing excess revenues when oil and gas prices rise. The budget sets the Energy Profits Levy to end on April 1, 2030, or earlier if the specified price condition is met, after which an oil and gas revenue tax regime will begin. This framework applies to the sector broadly and does not establish that the government has approved any particular project.
Production forecasts present a parallel challenge for Treasury revenues: the Office for Budget Responsibility expects UK oil and gas output to continue declining by about 10% a year between 2027 and 2031. The office says production has been falling since the start of the 2000s and is likely to continue declining during those years. In its estimates, the expected increase in tax revenues in 2026-27 is linked to higher oil and gas prices, while production remains on a downward path. This puts tax and production forecasts in different directions over the period: revenues rise on the back of prices, while output continues to shrink. The available material contains no documented details about the Kistos deal or its effect on reserves and production, so those aspects of the announcement in circulation cannot be confirmed.
The Decision Maker Panel survey was conducted between October 2 and 16 and received 1,945 responses, according to the Bank of England. The bank set December 4, 2026, as the publication date for the next release of survey data, allowing a fresh comparison of companies’ expectations for prices and wages. In the market, Kistos shares closed at 312 pence on October 30, according to London Stock Exchange data, before the deal announcement published on November 2. There are no documented official details available on the acquisition’s terms, assets or potential effect on the company. Britain’s tax framework provides for the subsequent tax to begin when the Energy Profits Levy ends on the specified date, or earlier if the price condition is met.