UK Economics: DMP shows little in the way of firm inflationary pressures

Research evidence excerpt

UK Economics: DMP shows little in the way of firm inflationary pressures

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03 Jul 2026 11:02:45 ET │ 9 pages

UK Economics

DMP shows little in the way of firm inflationary pressures

CITI’S TAKE

There is little in the way of surprise from this morning’s June datapoint

from the DMP survey. Firm price expectations to continue to moderate

following a jump after the Middle East conflict in February. This is yet

another data point that points to an MPC hold for the remainder of this

year. May RostomAC

+44-20-7986-2154

• The uncertainty series shows that high uncertainty peaked following the start of may.rostom@citi.com

the Middle East Conflict in February and hasn’t really come down much since Callum McLaren-StewartAC

(Figure 1). This distributional shift away from medium levels of uncertainty to +44-20-7500-1604

high levels of uncertainty will be further signs of the economy retrenching, e.g.

callum.mclarenstewart@citi.com

increasing precautionary saving or reducing consumption. However, the hawks

on the Committee will say this says nothing about how inflation will move from

here on.

• However, when looking at what the DMP says about pricing movements in the

next year, there is barely any movement in the tails (Figure 2 and 3). This an

argument for those on the fence. When the headline data is unclear, one looks

at movement in the tails to understand what is bubbling below the surface. A lot

of the movement in mean prices result when the median and the top end of the

pricing distribution move. This can be seen most clearly in 2022 when the 90th

percentile helped push the single month measure higher. This isn’t the case

now, and prices at the 90th percentile have been broadly stable. An MPC dove

will take comfort from this chart and conclude that the likelihood of CPI