UK inflationary pressures rise with gain in business confidence

UK business confidence rose to an 11-month high in April with companies optimistic about their plans to raise prices over the next year, a survey by Lloyds Banking Group showed.

Lloyds Bank’s Business Barometer report showed 61 per cent of businesses intend to increase prices in the next 12 month. That’s up two points in the past month, closer to a record reached in December and well above the pre-pandemic average of 36 per cent.

The findings feed concerns at the Bank of England that upward pressures on prices may become more persistent. Inflation has lingered in double digits for seven months, prompting investors to price in more interest-rate hikes in the months ahead.

“With majority of businesses also intending to raise their prices, this may add to existing inflationary pressures,” Paul Gordon, managing director for relationship management at Lloyds Bank Business & Commercial Banking, said in a report on Friday (Apr 28).

Overall business confidence edged up to 33 per cent, the highest since May 2022, driven by optimism in hospitality and financial services.

Those figures confirm official data suggesting the economy is weathering a cost-of-living crisis better than expected, with strong wage growth and unemployment near historic lows.

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The survey, conducted from Apr 3 to Apr 19 and also showed more companies were expecting to increase headcount over the next year, maintaining a five-month trend. BLOOMBERG