The world of economics is constantly evolving, and staying informed about the latest trends and statistics is crucial for businesses, investors, and policymakers. In this blog post, we will dive into the recent findings from the Decision Maker Panel (DMP) survey, conducted in the UK, shedding light on key economic indicators such as output prices, inflation, wage growth, and uncertainty. These insights provide valuable information for understanding the current state of the economy and making informed decisions.

1. Output Prices on the Rise

The DMP survey revealed that firms reported a significant increase in their output prices. Over the three months leading up to October, the annual rate of output price inflation averaged 7.1%. While this figure is substantial, it did show a slight decrease of 0.3 percentage points from the previous month, September. Looking at the single-month data for October, output price inflation was 6.8%, a 0.1 percentage point drop compared to September. It’s important to note that the DMP covers a wide range of firms across the entire economy, not solely consumer-facing ones.

2. Expectations for the Future

Despite the recent uptick in output prices, businesses are expecting a gradual decline in output price inflation over the coming year. Year-ahead own-price inflation was anticipated to be 4.5% in the three months leading up to October, down from 4.8% in the three months leading up to September. This trend reflects a gradual reduction in expected output price inflation throughout the year, indicating a degree of stability and predictability in the market.

3. Inflation Insights

The DMP survey also touched upon consumer price inflation (CPI). Expectations for year-ahead CPI inflation slightly decreased to 4.6% in October, down from 4.9% in September. The three-month moving average showed a 0.2 percentage point decline to 4.8% in the three months leading up to October. In addition, three-year ahead CPI inflation expectations decreased by 0.1 percentage point to 3.1% in October. It’s worth noting that these expectations came in lower than the current perceived CPI inflation rate of 6.9% in October (down from 7.1% in September). The latest release from the Office for National Statistics (ONS) in October showed that annual CPI inflation remained steady at 6.7%.

4. Wage Growth and Uncertainty

Expected year-ahead wage growth remained stable at 5.1% on a three-month moving average basis. However, the single-month reading for October showed a minor decrease of 0.1 percentage point from September, landing at 5.1%. Notably, expected year-ahead wage growth was lower than realized wage growth, which stood at 6.8% in the single-month data and 6.9% for the three months leading up to October.

In terms of business uncertainty, 50% of firms surveyed reported that the overall level of uncertainty facing their business was high or very high in October, slightly down from 51% in September. Sales uncertainty and price uncertainty both decreased slightly on a three-month moving average basis. These fluctuations in uncertainty reflect the dynamic nature of the economic landscape.

5. Borrowing Costs

The October DMP survey included questions on borrowing costs. Firms reported that the average interest rate they were paying on their borrowing, including both bank and market-based loans, was 6.7%. This was 0.1 percentage point higher than reported in September. Looking ahead, firms expect a modest decline in the average interest rate on their borrowing to 6.2% over the next year, although it remains higher than the interest rate of 3.4% that firms had reported paying at the end of 2021.

Conclusion

In an ever-changing economic environment, the insights provided by surveys like the Decision Maker Panel are invaluable for understanding the current state of the economy. From output prices and inflation to wage growth and uncertainty, these statistics offer a comprehensive view of economic trends, helping businesses and policymakers make informed decisions. As we continue to navigate the complex world of finance and commerce, staying up-to-date on such data remains a crucial component of effective decision-making.