LONDON, Dec 1 Reuters British businesses reported cooling price pressures but warned of lower employment and investment ahead, in a Bank of England survey on Thursday that should reassure policymakers that their interest rate rises are taking effect.

Businesses on average reported that they have raised prices by 7.2 over the 12 months to November, the smallest amount since April, and expected prices to rise by 5.7 over the coming year, the least since February.

The BoE looks closely at surveys of businesses39; pricing expectations for a guide as to how persistent inflation is likely to be, and how much it needs to raise interest rates.

Inflation expectations among the British public have also fallen from their peak in August, according to a monthly survey by Citi and YouGov released on Wednesday.

Manufacturing purchasing managers39; index PMI data on Thursday showed British factory output prices rose at the weakest pace since March 2021.

Consumer price inflation hit a 41year high of 11.1 in October, more than five times the BoE39;s 2 target, and the BoE survey showed businesses expected it to be 7.2 in a year39;s time and 3.9 in three years.

In outright terms, expectations for CPI and producer prices remain higher than the BoE might like. When CPI was last on target, the producer price measure was typically in a 23 range.

Financial markets expect the BoE to raise interest rates to 3.5 from 3 on Dec. 15, after a threequarterpoint rise in November.

Both the BoE and…