UK business confidence rose for the first time in 3 months in May, with more companies planning to increase prices.

Lloyds Bank said its business barometer increased 5 points to 38 per cent, the highest reading since February and 10 points above the long-term average. Fifty-seven per cent of those polled plan to raise prices, the fifth consecutive monthly gain.

The figures add to the sense that the recovery is strong enough for the Bank of England to push up interest rates again in an attempt to quell inflation, which has reached the highest in 40 years. Lloyds said companies serving consumers were less confident, reflecting a squeeze on living standards with prices rising faster than wages.

"Firms, in general, seem able to rebuild some of their margins through price increases," said Hann-Ju Ho, an economist at Lloyds' commercial banking unit. "Consumer-facing industries, such as retail, are not feeling the same confidence."

Lloyds also said:

• Confidence among retailers fell 2 points to 27 per cent, the lowest since March

• 46 per cent of companies cited higher costs as their biggest concern

• 57 per cent say will increase prices, the fifth increase in a row

• 53 per cent plan to boost hiring, up 9 points in the past month the first increase in 3 months and bringing the measure to its second-highest level since the start of the pandemic BLOOMBERG