UK: More firms expected to hike prices than at any time since 1980s

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More UK-based businesses are reportedly preparing to increase their prices than any time before since the 1980s, putting further pressure on consumers already feeling the squeeze due to hikes in the prices of gas, petrol, and electricity.

In its recent survey of over 5,600 firms, the British Chambers of Commerce has found that almost two-thirds of businesses in the country are expected to increase prices over the coming three months, the highest since it had begun its survey in 1989.

The survey also revealed that domestic sales in many sectors have become stagnant, while business investments are reaching historically low levels.

The BCC stated that investment in plant, equipment, and machinery remained stagnated as 58% of firms reported no change in investment spending. In fact, only 27% of firms reported an increase in investment spending, while 15% reported a decline.

Labour Party stated that the survey indicated increasing pressure due to inflation as costs of imported energy and raw materials soared in international markets.

Shadow Secretary of State for Business and Industrial Strategy, Jonathan Reynolds, stated that the Conservative party is raising taxes instead of supporting businesses, and has turned its back on the energy-intensive industry.

When inquired by BCC what pressures the firms were facing, 92% of manufacturers said raw materials, while 56% cited costs of energy and transport, among others.

One-third of the firms stated that labor costs have also influenced their price hike decisions following increases in wages and the rate of national insurance for employers this month.

Overall, 62% of firms are expected to raise their prices in the coming three months, while only 1% are expected to decrease their prices.

Suren Thiru, Head of Economics at BCC, stated that even though businesses had bounced back at the beginning of the year after Covid restrictions were lifted, surging inflation and uncertainty due to the invasion of Ukraine by Russia will probably slow down growth for the rest of the year.

Thiru further added that many firms lacked cash reserves to survive more shocks, leaving them vulnerable amidst the Ukraine war and constant price increases.

Source credit: https://www.theguardian.com/business/2022/apr/01/more-uk-firms-expect-to-raise-prices-than-at-any-time-since-1980s-inflation