British businesses are facing their most severe inflation worries in over two years, according to alarming new data from the British Chambers of Commerce, even as the Bank of England continues to hold interest rates steady.
The latest Quarterly Economic Survey reveals that 65% of firms expect their prices to rise in the coming months, marking the highest level of inflation anxiety since the final quarter of 2022. This surge in cost pressures comes despite the central bank maintaining its base rate at 5.25% for the sixth consecutive meeting.
Mounting Pressure on Businesses
David Bharier, Head of Research at the BCC, expressed deep concern about the findings. "These results should set off alarm bells for the UK economy," he warned. "The fact that two-thirds of companies anticipate price increases demonstrates the immense cost pressures continuing to burden British businesses."
The manufacturing sector appears particularly vulnerable, with 72% of firms predicting price hikes compared to 64% in services. Smaller businesses with fewer than 50 employees are also feeling the squeeze more acutely than their larger counterparts.
Mixed Economic Signals
While some indicators show modest improvement in business confidence and easing recession fears, the inflation outlook remains deeply troubling. The survey of over 4,800 companies suggests that persistent cost pressures from:
- Rising wage demands
- Increased raw material costs
- Higher energy bills
- Growing transport expenses
are continuing to drive inflation expectations upward, despite the Bank's efforts to control price growth through monetary policy.
Call for Government Action
The BCC is urging the next government to implement clear, long-term strategies to stimulate investment and growth. "Whoever forms the next administration must prioritise creating a stable environment for business investment," Bharier emphasised.
With the general election approaching, business leaders are watching closely to see how different parties plan to address the persistent challenge of inflation while supporting economic growth.
