Record Share of U.K. Firms Expect to Raise Prices, Lloyds Says
Almost half of U.K. companies expect to increase prices, a record high, adding to inflation concerns that will weigh on Bank of England policy makers ahead of their meeting this week.
A survey by Lloyds Banking Group Plc showed 45% of businesses expect to raise prices, which will buttress market expectations that the U.K. central bank will deliver its first post-pandemic rate rise on Nov. 4. The businesses surveyed said they would need to pass on rising input costs -- including for raw materials and staffing -- to consumers.
The BOE’s new chief economist, Huw Pill, had already warned that inflation could exceed 5% in the coming months, a percentage point higher than the current BOE forecast, and more than double the central bank’s target.
Lloyds also found that 48% of U.K. companies said it had become easier to hire people with the right skills, and almost all planned to bring back more than half of furloughed workers, indicating strength in the jobs market.
That will temper concerns that staff who had been receiving government support would not be taken back by their old employers or have the appropriate experience to find new jobs.
The monetary policy committee’s more dovish members had suggested that it would be wiser to wait for clearer data on unemployment after the end of the furlough program before hiking interest rates, but the findings will add to expectations of a monetary policy tightening.
“While economic optimism saw a slight dent in October due to rising costs and the ongoing supply chain issues, it is clear that firms are still feeling relatively buoyant as overall business confidence remains high and above the long-term average,” said Lloyds Senior Economist Hann-Ju Ho.
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