Around three quarters of firms say they are putting up prices in response to surging costs such as wages, energy and raw materials, according to a new survey.
The British Chambers of Commerce (BCC), which conducted the poll, said it highlighted the intense pressure creating a “cost of doing business crisis” for firms across the country.
However, the consequences of higher prices on consumers has also been laid bare as the results of a separate survey – released by the Office for National Statistics – showed almost a third of all trading businesses had reported decreased sales – with hotels and restaurants hit hardest.
The BCC called for the chancellor to introduce a temporary energy price cap for small businesses and to extend to those firms the financial support announced for households last week.
2:45 UK inflation hits a 30-year highOther measures it wants to see include a one-year delay on planned national insurance increases and a moratorium until the end of the current parliament on any further policies adding costs to business such as taxes or regulation.
AdvertisementIn its findings, the BCC said 73% of firms planned to raise prices that would further add to the cost of living crisis faced by households.
In the survey of more than 1,000 businesses, 63% pointed to salaries and contractor costs as a source of pressure on them to raise prices, with 62% saying gas and electricity bills were having such an effect and 52% acknowledging the impact of raw materials.
More on Cost Of Living Related Topics: Cost of livingInflationIt said 34% faced pressure to raise prices as a result of UK taxes. Just 9% said they were not facing any such pressure.
While around three quarters of firms said they would increase prices, the survey also revealed plans by some to cut costs and scale back investments, with 5% considering shutting up shop altogether and ceasing trading.
BCC director general Shevaun Haviland 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.
4:00 Why are your bills going up?“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.
“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.”
The survey was carried out between 17 January and 4 February.
It came as separate figures from a monthly poll by the Recruitment and Employment Confederation (REC) and KPMG showed more upward pressure on wages in January as the new year saw a sharp increase in hiring activity.
Starting salaries rose at the third sharpest rate on records going back to 1997 amid robust demand for workers and scarce candidates, the poll found.
REC chief executive Neil Carberry said: “With competition for staff still hot, companies are having to raise pay rates for new starters to attract the best people.
“And the cost of living crisis means there is also more pressure from jobseekers who want a pay rise.”
The findings come a day after the Bank of England’s chief economist Huw Pill warned that firms trying to maintain profits and workers seeking to maintain wage levels in line with inflation risked adding “self-sustaining momentum” to the price spiral.
Inflation hit 5.4% in December, its highest level since 1992, and is expected to climb above 7% in coming months as energy bills rise further in the spring.