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Three in 10 UK businesses passing on price increases to customers

·Business Reporter, Yahoo Finance UK
·3-min read
Beer prices are increasing
Accommodation and food service activities industry saw the highest percentage of UK companies passing on price increases at 56%. Photo: Jesus Hellin/Europa Press via Getty Images

Almost three in 10 (29%) UK firms are having to pass on price increases to customers amid soaring inflation, rising energy prices, and a sharp cost of living squeeze, new data has shown.

According to the Office for National Statistics (ONS) on Thursday, just over a third (36%) of businesses are absorbing costs as a result of general price increases.

The research showed that the accommodation and food service activities industry saw the highest percentage of companies passing on costs at 56%.

Approximately 15% of businesses currently trading reported that they had to change suppliers or find alternative solutions to get the materials, goods or services they needed from within the UK in March 2022.

Meanwhile, 14% said they were experiencing a shortage of workers in early April 2022, compared with 13% in early March. For businesses with 10 or more employees, these percentages were 34% and 31%, respectively.

Read more: UK retailers to be hit by 'tsunami of costs', think tank warns

The two main concerns continued to be input price inflation (24%) and energy prices (21%); the percentage of businesses reporting no concerns remained broadly stable, at 19%.

It came as separate ONS data revealed that the number of seated diners in Britain stood at 138% of the equivalent week in 2019, its highest relative level since early September 2021.

Visits to retail and recreation locations were at 91% of pre-COVID levels in the latest week, and 8% higher than the previous week in the run-up to the Easter holiday weekend. Bookings at restaurants were their strongest in seven months, the ONS said.

It comes as the Bank of England (BoE) is keeping a close eye on how consumers respond to the sharp rise in inflation, which threatens to slow the economy after its recovery from the COVID-19 pandemic.

The annual rate of inflation rose to 6.2% in the year to February, its highest level since March 1992.

This was above January’s previous 30-year high of 5.5%. On a monthly basis, CPI inflation was 0.8%, exceeding expectations for a 0.6% rise, and the biggest increase since 2009.

The biggest contribution came from soaring energy, fuel and food prices, while transport saw the highest rate for the second consecutive month.

Read more: Calls for UK employment bill to give workers rights to flexible working

Transport indicators showed a mixed picture this week with total ship visits increasing by 6% and cargo and tanker ship visits decreasing by 2%.

Meanwhile road traffic fell by 14 percentage points, consistent with previous bank holidays, due to falls in heavy goods and light commercial traffic.

The data also showed that total online job adverts increased by 4% in the week to 14 April 2022, to 144% of their February 2020 average level, while a net 2% of firms reported increasing turnover in March 2022 compared with the previous month.

Watch: How does inflation affect interest rates?

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