Fewer UK companies plan to increase prices, survey shows
FEWER British firms plan to raise their prices in the coming months, according to a survey that will give reassurance to the Bank of England as it considers the possibility of cutting interest rates as soon as next month.
In a latest sign of the improving economic picture inherited by new Prime Minister Keir Starmer, the British Chambers of Commerce said 39 per cent of member companies it surveyed expected to raise prices over the next three months, down from 46 per cent in its previous survey published in April.
“Concern about inflation among businesses has dropped to levels last seen in 2021,” David Bharier, head of research at the BCC, said. “A Bank Rate cut later this year will help bring down borrowing costs.”
The chance of the BoE cutting its benchmark Bank Rate to 5.0 per cent from 5.25 per cent on Aug 1 is seen as more than 50-50 by investors after headline inflation recently fell to the central bank’s 2 per cent target and measures of inflation pressure also eased.
The BCC survey showed sales and cashflow improved in the second quarter of 2024 to pre-pandemic levels and the share of firms expecting an increase in turnover in the next 12 months rose to 58 per cent from 56 per cent in the April survey.
However, 75 per cent of respondent firms were still not increasing investment, albeit with wide variations between sectors - 42 per cent of transport and logistics firms said they had increased investment levels compared with only 19 per cent of retail companies.
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Starmer has said he hopes the prospect of political stability after 14 often turbulent years under the Conservatives will encourage companies to invest more.
The BCC survey was based on responses from 4,967 companies - 91 per cent of them with under 250 employees - polled between May 13 and June 10. REUTERS
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