© Reuters. FILE PHOTO: General view of signage at a branch of Lloyds bank, in London, Britain October 31, 2021. REUTERS/Tom Nicholson
LONDON (Reuters) – Almost six out of 10 British companies plan to raise prices in the coming year due to rising cost pressures, a monthly survey by Lloyds (LON:), a bank, showed on Friday.
Lloyds said its wider measure of business confidence was unchanged in April after a sharp fall in March following Russia’s invasion of Ukraine.
“Overall confidence is above the long-term average, but it is still expected that growth will moderate over the coming months and many businesses will remain cautious as they face into these headwinds,” Lloyds Bank economist Hann-Ju Ho said.
Some 58% of companies said they intended to raise prices, up from 55% in March and the highest since this question was first asked in January 2018.
British consumer price inflation hit a 30-year high of 7.0% in March, and is likely to rise further this year due to a surge in energy prices.
The Bank of England is concerned that inflation is feeding through into a widening range of goods and services as businesses pass on increased costs for energy and other raw materials.
Economists expect the central bank to raise interest rates to 1.0% from 0.75% on May 5, taking borrowing costs to their highest since 2009.
Higher inflation is beginning to weigh on growth as consumers’ disposable income gets squeezed.
Although businesses are raising pay by more than last year, pay rises are typically well below the rate of inflation. Some 27% of firms in the Lloyds survey planned to raise pay by at least 3%, rising to 42% of larger companies.
Hiring intentions weakened for a second month in a row to their lowest since August 2021, with 44% of firms planning to increase staff numbers.
The Lloyds survey was based on responses between April 1 and April 19 from 1,200 businesses with a turnover of at least 250,000 pounds ($310,975).
($1 = 0.8039 pounds)