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Rising costs seep into every sector of UK economy

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Every sector of the British economy is suffering from swelling costs in a sign that inflation will trend much higher in the coming months, reveals a fresh study published today.

Higher wages, compounded by soaring energy and raw material costs, are severely eroding firms margins, according to research carried out by high street lender Lloyds.

The fresh figures reinforce official data published by the Office for National Statistics yesterday showing British businesses’ input costs have soared 13.5 per cent over the last year.

Jeavon Lolay, head of economics and market insight at Lloyds, said firms’ cost backdrop remains “acute as higher energy prices and wage bills pushed up firms’ expenses”. 

Widespare cost increases have ensnared British businesses since the UK emerged from Covid-19 restrictions last spring, mainly triggered by a global supply chain crisis and an energy crunch on the Continent.

The spread between British firms’ costs and prices is the joint highest of any country tracked by Lloyds, raising the prospect of inflationary pressures worsening if businesses hike prices in an effort to shield their margins.

A looming 1.25 percentage point NI hike this April will add to firms’ costs.