Almost half of UK businesses are expecting to increase the price of their goods or services in the coming months, despite the broader easing of inflation pressures, new findings suggest.
A British Chambers of Commerce (BCC) survey found 46 per cent of business respondents said they expect the price of their goods and services to continue rising.
Fifty-one per cent of businesses surveyed said they think their prices will stay the same, while only 3 per cent are gearing up to drop their prices.
More price rises: Almost half of UK businesses are expecting to increase the price of their goods or services in the coming months
‘Economic headwinds continue to impact heavily on business investment’, the findings added.
The survey, conducted between 12 February and 12 March, spanned 4,800 firms across the UK, with 92 per cent being small or medium-sized businesses.
Higher labour costs remain a key reason many businesses are hiking their prices, the BCC survey results revealed.
The BCC said: ‘Some sectors are feeling this pressure more than others, with 77 per cent of hospitality firms and 76 per cent of manufacturers citing it as a key driver.’
The survey results also paint a gloomy picture when it comes to business investment.
Most firms surveyed said they had not increased the amount of new plant, machinery and equipment purchased or rented.
Twenty-four per cent reported an increase in investment, the same as in the final quarter of last year, while 60 per cent said levels had remained the same, and 16 per cent reported a decrease.
Sluggish: Levels of business investment remain sluggish, the BCC said
The BCC said: ‘There are large sectoral disparities in investment levels. 28 per cent of hospitality sector firms say they have decreased investment, while 30 per cent of manufacturing businesses have increased investment.’
According to the BCC’s findings, there was no overall improvement in business conditions in the first quarter of this year, ‘as measured by investment, sales and cashflow.’
Following a slight uptick in the final quarter of last year, business confidence levels have ‘remained static’.
Fifty-six per cent of firms surveyed expect to see their turnover increase over the year, unchanged from the final quarter of last year.
Only 14 per cent of respondents are expecting to see their financial situation worsen in the year ahead, wile 29 per cent expect things to remain the same.
The BCC added: ‘Profitability confidence has remained static, with 48 per cent of companies saying they expect profits to increase in the next year.’
David Bharier, head of research at the BCC, said: ‘The latest results from the QES provide further evidence that the UK economy is trapped in a low-to-no growth state.
‘Although business confidence remains buoyant at the start of the year, most SMEs are still not reporting any tangible improvement to business conditions.
‘The lack of investment among most SMEs is a real concern. Inflation, skills shortages, and an almost endless list of new trade barriers with the EU, coupled with a lack of clear direction on infrastructure and technology investment at the government level, have led to paralysis for many businesses.
‘The increased percentage of firms expecting price rises is also a reflection of global conflicts and the introduction of further import costs.
‘As we head towards an election, businesses will need to see a clear long-term plan for investment and innovation from politicians.’
Shevaun Haviland, director general of the BCC, said: ‘We desperately need to see SMEs investing again. Government moves on rate relief, planning reform and full expensing are welcome – but they haven’t yet shifted the dial.’
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