U.K. Inflation Concerns Hit the Highest on Record for Businesses

(Bloomberg) -- More U.K. businesses than ever before are worried about inflation, and a record number are planning to increase their own prices, according to a survey by the British Chambers of Commerce.

The poll of almost 5,500 firms is the latest evidence that a wave of price gains is eating into confidence across the economy. Prices are rising at their fastest pace in a decade, adding to a squeeze on consumers and industry coming from higher taxes and energy costs.

The survey is an indication that Britain's economic recovery may have stalled in the fourth quarter. Surging infections of the omicron variant of the coronavirus are adding another headwind that will be felt early this year.

Almost 60% of companies expect to boost prices in the next three months, according to the poll released by the BCC late Wednesday. Two-thirds cited inflation as a concern. The BCC said that indicates inflation, currently above 5%, will climb even further this year.

Those pressures have left more than a quarter of firms, including a record number of manufacturers, worried that interest rates will rise, the survey found. Last month, the Bank of England hiked rates for the first time since the pandemic, and speculation is growing that more increases will come soon.

“A substantial inflationary surge is likely in the coming months,” said Suren  Thiru, head of economics at the BCC. Still, “the notable uptick in concerns over higher interest rates underscores the need for the Bank of England to proceed with caution on further rate rises to avoid undermining confidence and an already fragile recovery.”