When asked what circumstances would need to be in place for inflation to return to 2%, firms referred to:
- higher interest rates
- improved supply chains
- lower oil prices
- ceased conflict in Ukraine
Some firms noted that an eventual recession, which they often attributed to higher interest rates, would support or be needed for a return of inflation to 2%. A few businesses also said that labour costs are contributing to rising inflation and that increased immigration or a slowing economy would be necessary to reduce wage pressures.
Almost all businesses continue to expect inflation to return to 2% within the next five years, but BLP results suggest a high degree of uncertainty around expectations. That is, although nearly half of businesses are confident that the Bank will return inflation to its target within the next five years, other firms pointed to international factors, such as global supply chain issues and elevated prices for oil and other commodities, as impediments.