The May DMP survey was conducted between 10 and 24 May and received 2,317 responses.

Firms reported that their output prices rose by an average annual rate of 4.9% in the three months to May, down 0.3 percentage points from 5.2% in the three months to April. Note that the DMP covers own prices from firms across the whole economy, not just consumer-facing firms.

Businesses expect their output price inflation to decline over the next year. Year-ahead own-price inflation was expected to be 3.9% in the three months to May, down from 4.0% in the three months to April. Output price inflation is, therefore, expected to decline by 1 percentage point over the next 12 months based on three-month averages.

One-year ahead CPI inflation expectations remained unchanged at 2.9% in May at the same level firms reported in April. The three-month average fell by 0.1 percentage points to 3.0% in May. Three-year ahead CPI inflation expectations were 0.1 percentage points lower at 2.6% in the three months to May, while the monthly data was unchanged from April at 2.6%. 

Firms reported annual employment growth of 1.5% in the three months to May, lower than the 1.7% reported in the three months to April. Expected year-ahead employment growth was unchanged at 1.3% in the three months to May.

Expected year-ahead wage growth fell by 0.3 percentage points to 4.5% on a three-month moving-average basis in May. Annual wage growth was 6.0% in the three months to May, down 0.2 percentage points from the three months to April. Firms therefore expect their wage growth to decline by 1.5 percentage points over the next 12 months based on three-month averages.

Firms reported that the average interest rate that they were paying on their borrowing (both bank and market based) was 6.6% in May, 0.4 percentage points lower than reported in April. Over the next year, firms expect the average interest rate on their borrowing to decline to 5.7%, 0.3 percentage points lower than they expected for the year ahead in April.

This month the DMP survey also included questions on firms’ unit costs growth. Firms reported that on average over the past year unit costs have grown by 6.2%, 0.2 percentage points lower than they expected a year ago, in May 2023, for the year ahead. Firms expect cost growth to fall further over the coming year to 5.4%.