Almost half of companies expect to increase their prices soon, says BCC

Almost half of UK businesses expect to increase the price of their goods or services in the coming months, despite a further easing of inflationary pressures, new findings suggest.

A British Chamber of Commerce (BCC) survey found that 46 per cent of businesses surveyed said they expect the price of their goods and services to continue to rise.

Fifty-one percent of companies surveyed said they believe their prices will stay the same, while only 3 percent are preparing to lower them.

“Economic obstacles continue to have a strong impact on business investment,” the results add.

The survey, carried out between February 12 and March 12, covered 4,800 businesses across the UK, of which 92 per cent were small or medium-sized businesses.

Higher labor costs remain a key reason why many companies are raising their prices, BCC survey results revealed.

The BCC said: “Some sectors are feeling this pressure more than others, with 77 per cent of hospitality businesses and 76 per cent of manufacturers citing it as a key factor.”

The survey results also paint a bleak picture when it comes to business investment.

Most companies surveyed said they had not increased the amount of new plant, machinery and equipment purchased or rented.

24 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.

Slow: Business investment levels remain slow, BCC said

The BCC said: ‘There are large sectoral disparities in investment levels. 28 percent of hospitality companies say they have decreased investment, while 30 percent of manufacturing companies 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 cash flow.”

After a slight rebound in the final quarter of last year, business confidence levels have “remained static.”

Fifty-six percent of companies surveyed expect to see an increase in their turnover during the year, unchanged from the final quarter of last year.

Only 14 percent of respondents expect their financial situation to worsen over the next year, while 29 percent expect things to stay the same.

The BCC added: “Confidence in profitability has remained static, with 48 per cent of companies saying they expect profits to increase next year.”

David Bharier, head of research at the BCC, said: “The latest QES results provide further evidence that the UK economy is stuck in a state of low or no growth.

‘While business confidence remains buoyant at the start of the year, the majority of SMEs are yet to report any tangible improvement in trading 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, together with the lack of clear direction on infrastructure and technology investment at government level, have led to the paralysis of many businesses.

‘The higher percentage of companies expecting price increases is also a reflection of global conflicts and the introduction of higher import costs.

“As we approach the election, businesses will need politicians to present a clear long-term plan for investment and innovation.”

Shevaun Haviland, CEO of the BCC, said: “We desperately need SMEs to invest again.” The government’s measures on rate relief, planning reform and outright cost reduction are welcome, but they have not yet turned the tide.’