UK firms less likely to raise prices – BCC

British firms are less likely to raise prices in the coming months, according to a survey by the British Chambers of Commerce (BCC), providing some reassurance to the Bank of England (BoE) as it considers cutting interest rates as soon as next month.

The survey revealed that 39 per cent of member companies plan to increase prices over the next three months, down from 46 per cent in April.

David Bharier, head of research at the BCC, highlighted that business concerns about inflation have fallen to levels last seen in 2021. This trend could support the BoE’s consideration of lowering the bank rate to 5.0 per cent from 5.25 per cent on August 1, given that headline inflation recently aligned with the central bank’s 2 per cent target and broader inflation pressures have eased.

The BCC survey showed that sales and cash flow for companies improved in the second quarter of 2024, reaching pre-pandemic levels. Additionally, 58 per cent of firms anticipate higher turnover in the next 12 months, up from 56 per cent in April.

However, despite the positive economic outlook, 75 per cent of firms are not planning to increase investment, with significant variations across sectors. For example, 42 per cent of transport and logistics companies reported increased investment, compared to just 19 per cent in the retail sector.

Prime Minister Keir Starmer, who recently took office, expressed optimism that political stability following 14 years of Conservative governance will encourage businesses to invest more.

The BCC survey included responses from 4,967 companies, 91 per cent of which are small and medium-sized enterprises with fewer than 250 employees, and was conducted between May 13 and June 10.

Attribution: Reuters.