The share of businesses worried about inflation is at its highest level in almost a decade.
That’s according to the British Chambers of Commerce’s quarterly economic survey of more than 5,800 companies, which also found that the balance of manufacturers expecting to raise prices was the highest since records began in 1989.
Andy Haldane used his last speech as Bank of England chief economist on Wednesday to warn that consumer-price growth could reach almost 4% by Christmas, twice the central bank’s target and over the 3% it estimated this month.
“The historic uptick in price expectations suggests that inflation will drift markedly higher,” said Suren Thiru, head of economics at the BCC.
Most BOE policy makers have described price pressures as transitory. That’s prompted central bankers to weigh when to scale back emergency support for the economy and shift toward fighting inflation. The BCC survey found that the cost of raw materials was the key driver of inflation.
Tim Squires, commercial director of parts manufacturer Squires Gear, said prices had “absolutely skyrocketed” in the past few months. But while some customers would be willing to share the burden, “some just aren’t in a position to take on any additional costs.”
The survey also found:
- Some 44% of companies reported an increase in domestic sales, up from 28% in the first quarter. The rise was highest for in the marketing and media industries, and lowest for consumer services
- Cash flow improved, but not as much as domestic sales
- All sectors saw a rise in the level expecting turnover to climb compared to last quarter
- The second quarter may prove the high point for momentum in the U.K. economy as government support programs ending and the surge in activity after lockdown fading
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