The British Chamber of Commerce said its latest quarterly survey found that nearly two-thirds of businesses are expected to raise prices over the next three months, the highest since the survey began in 1989. Amid warnings from opposition lawmakers and business groups that ministers should offer more support to troubled companies, a record number of manufacturers and service companies said they would raise prices. The survey of more than 5,600 companies also revealed that domestic sales had remained stagnant in most sectors and business investment remained at historically low levels. Investments in plant, machinery and equipment continued to be stagnant, the BCC said, with 27% of businesses reporting an increase in investment spending, while 58% reported no change and 15% a decrease. “This measurement remains largely unchanged from the second quarter of 2021,” it added. This is despite tax relief from April 2021 which offers companies a 130% discount on their profits for every £ 1 investment cost. Labor said the BCC survey showed that inflationary pressures were gaining momentum as the cost of imported raw materials and energy increased in international markets. Jonathan Reynolds, the shadow business secretary, said: “Instead of supporting companies with spiraling inflation, the Conservatives are raising taxes and turning their backs on energy-intensive industries.” Last month, data showed that consumer confidence fell again to the levels we last saw in November 2020, just before the second national lockdown Covid-19. The widely used GfK index fell to -31 in March as consumers were hit by 30-year highs of 6.2%, high fuel and food prices, forecasts of higher interest rate hikes and higher personal taxes. Following the chancellor’s spring statement last month, the Treasury Department’s independent meteorologist, the Office for Budget Responsibility, cut its estimate for GDP growth for this year to 3.8%, from a previous estimate of 6%. When companies were asked by the BCC what pressures they faced to raise prices, 92% of manufacturers cited raw materials, while 56% cited energy and transportation costs among other overheads. One-third of companies said labor costs also influenced their decision to raise prices following wage increases and an increase in employers’ national insurance rates from this month. The rate of recent interest rate hikes also rose in the quarter. Almost one in 3 (32%) companies were worried about interest rates, up from 27% in the last three months of 2021. Overall, 62% of businesses expected their prices to rise in the next three months, up from 58% in the fourth quarter of 2021. Only 1% expected their prices to fall. Subscribe to the daily Business Today email or follow the Guardian Business on Twitter at @BusinessDesk Suren Thiru, head of BCC finance, said that while businesses had recovered in the first three months of 2022 following the end of the B Covid plan, rising inflation and uncertainty caused by the Russian invasion of Ukraine were possible. slow down growth over the rest of the year. Thiru said: “High price pressures indicate that the current inflation boom will escalate significantly in the coming months. The reversal of the VAT cut on hospitality, the higher energy price ceiling and the rise in energy and commodity prices amid Russia’s invasion of Ukraine are expected to push inflation well above 8% in the short term. ». He added that many companies still lack cash reserves to withstand further shocks, making them vulnerable to a long war in Ukraine and more persistent price increases. “The first quarter may be the highest point for the UK economy with activity likely to stall in the coming quarters as rising inflation, rising energy bills and higher taxes put more and more activity.”
