More UK businesses than ever before are worried about inflation, and a record number are planning to increase their own prices, a survey by the British Chambers of Commerce (BCC) showed.
The poll of almost 5,500 firms is the latest evidence that a wave of price gains is eating into confidence across the economy. Prices are rising at their fastest pace in a decade, adding to a squeeze on consumers and industry coming from higher taxes and energy costs.
The survey is an indication that Britain’s economic recovery might have stalled in the fourth quarter. Surging infections of the Omicron variant of SARS-CoV-2 are adding another headwind that would be felt early this year.
Photo: Reuters
Almost 60 percent of companies expect to boost prices in the next three months, the poll released by BCC late on Wednesday showed. Two-thirds cited inflation as a concern.
The BCC said that indicates inflation, currently above 5 percent, would climb even further this year.
Those pressures have left more than one-quarter of firms, including a record number of manufacturers, worried that interest rates would rise, the survey found.
The Bank of England last month hiked rates for the first time since the COVID-19 pandemic, and speculation is growing that more increases would come soon.
“A substantial inflationary surge is likely in the coming months,” BCC head of economics Suren Thiru said. Still, “the notable uptick in concerns over higher interest rates underscores the need for the Bank of England to proceed with caution on further rate rises to avoid undermining confidence and an already fragile recovery.”
Separately, UK automakers expect sales to rebound this year, as the semiconductor shortage eases and demand for battery-powered vehicles grows.
The Society of Motor Manufacturers and Traders (SMMT) estimates new vehicle registrations in Britain would climb 19 percent to 1.96 million this year.
The group said it would update that forecast — formulated shortly before the emergence of the highly transmissible Omicron variant — again later this month.
“How good that growth is depends on the supply-chain issues being resolved,” SMMT chief executive officer Mike Hawes told reporters during a briefing. “We know that the demand is there, the technology is there, the new models are there.”
While last year was supposed to represent a lasting recovery from the initial onslaught of the COVID-19 pandemic, UK vehicle registrations inched up just 1 percent to 1.65 million because of the persistent supply-chain snarls, preliminary SMMT data showed.
That is about 29 percent below pre-pandemic levels.
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