Three-quarters (73%) of UK firms are planning to raise prices as they face “intense pressure” from soaring energy bills, rising wages and raw material costs.
A survey of 1,000 businesses by the British Chambers of Commerce (BCC) found 62% said rocketing energy bills were a driving factor behind the need to increase costs, with this figure rising to 75% among manufacturers.
Almost two-thirds (63%) said higher wages were driving prices rises. A further 87% of manufacturers said they were facing cost increases due to rising raw material costs from items including steel, cardboard and food.
Shevaun Haviland, director general at the BCC, said: “Without help from the Treasury to weather this storm many businesses, especially smaller ones, will be faced with a nearly impossible situation that will leave them with little choice but to raise prices.
“Our research has shown that businesses were drowning in rising costs even before the energy crisis began to bite. This latest data reveals that companies are now also under extreme pressure from spiralling gas and electricity bills as well as increased wages.
“As you can see from our research, the majority are having to raise prices in response, though many are also being forced to scale back planned investment or cut other costs from their balance sheet.
“Unabated, the surging cost pressures produced by the cost-of-doing-business crisis will continue to lead to increased prices and fuel the cost-of-living crisis currently being faced by people across the country.”
Haviland has written to chancellor Rishi Sunak urging him to:
• Publish the findings from the government’s Supply Chain Advisory Group and Industry Taskforce;
• Halt all policy measures that increase business costs for the rest of the current parliament; and
• Introduce an energy price cap for small businesses, offering them the same protection as households.
Mike Cherry, national chair of the Federation of Small Businesses, said: “A lot of small business owners will be feeling a double hit. First off, exclusion from the chancellor’s statement regarding support for those struggling with energy bills. And second, a rate rise that will increase repayments on a good deal of personal and professional debt, adding to existing cashflow woes just as tax rises loom.
“The government is right to help households with rising costs. It should be helping the smallest firms too, which face many of the same challenges as consumers in the energy market, but without the same protections.
“The household rebate should be matched by an equivalent business rates rebate, to help the smallest firms which have been weathering these price increases for months already, and which desperately need a measure of protection from the energy crisis storm.”
Meanwhile, Unilever, whose brands include Dove, Marmite and Hellmann’s, warned customers to expect prices to rise after the company said it is facing €3.5bn (£2.95bn) higher input costs over the course of 2022, due to market uncertainty on the outlook for commodity, freight and packaging costs.
Alan Jope, Unilever chief executive, speaking on an earnings call for the release of the company’s annual results for 2021, said: “We don't want to put prices up but we're seeing the highest inflation we've seen in a decade. There will be price increases on some products and in some markets but it will not be uniform across the world.”
Jope called current inflation “dramatic” and said price increases will be “phased in”.
In October, the consumer goods giant announced it had increased prices by 4.1% in the three months to September due to supply chain cost increases, marking the company’s biggest price increases since early 2012.