LONDON (Reuters) – Almost half British firms plan to raise their prices over the coming year as they struggle with high wage bills, according to a survey that underscored why the Bank of England is cautious about cutting interest rates.
The British Chambers of Commerce said 46% of its member companies expected to raise prices over the next 12 months, down only slightly from 47% in its previous quarterly survey published in January.
Only 3% of respondents expected to cut prices while 51% saw no change.
Staffing costs represented the main pressure on firms as a nearly 10% increase in the minimum wage came into force on April 1.
“The recent rise in the national living wage is good news for millions of employees,” Shevaun Haviland, the BCC’s director general, said. “But it comes at a time when labour costs pressures for business are already very high.”
David Bharier, head of research at the BCC, said the pricing expectations also reflected conflicts around the world and the costs of Britain’s plan to introduce more post-Brexit checks on imports from the European Union later this month.
The BoE has said the surge in wage growth last year is likely to fade only slowly, even with headline price growth now close to its 2% target.
The BCC survey showed 56% of respondents expected turnover to grow over the next 12 months, unchanged from the previous survey three months ago.
There was no overall improvement in business conditions as measured by investment, sales and cashflow, the BCC said.
The BCC survey, Britain’s longest-running private-sector business survey, was based on responses from 4,800 companies – 92% of them with under 250 employees – polled between Feb. 12 and March 12.