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A third of UK businesses to raise prices yet again

·Finance Reporter, Yahoo Finance UK
·2 min read
UK businesses A worker cuts newly manufactured bars of steel at the United Cast Bar Group's foundry in Chesterfield, Britain, April 12, 2022. Picture taken April 12, 2022. REUTERS/Phil Noble
Surging energy prices are pushing UK businesses to raise prices. Photo: Phil Noble/Reuters

One in every three UK firms expect to raise their prices because of surging energy bills, according to a survey by the Office for National Statistics (ONS).

Around half of all UK businesses reported that prices of materials and goods jumped in April compared to the previous month, with a third of firms stating that their production had been hit by recent increases in energy prices.

The UK’s energy price cap, the maximum amount a utility company can charge an average customer per year for the amount of electricity and gas they use, has risen by 54%, meaning a steep rise in bills this spring.

As of 1 April 2022, the cap rose from £1,277 to £1,971 for a household on average usage. That means a £693 per year increase for the average customer.

Read more: UK energy price cap expected to rise to £2,800 in October, says Ofgem boss

UK households and businesses face even higher bills as the boss of the UK's energy regulator has warned that the energy price cap is expected to rise to around £2,800 in October.

"Now, this is uncertain, we are only halfway through our price cap window but we are expecting a price cap in October in the region of £2800," Jonathan Brearley, CEO of Ofgem, told the Business, Energy and Industrial Strategy committee.

Around a third of UK businesses (29%) expect to increase the prices of goods or services sold in June 2022, with energy prices being reported as the main factor for businesses considering to do so at 38%.

Approximately a quarter (23%) of businesses reported a lower turnover in April compared to the previous month, with the repair of motor vehicles and motorcycles industry reporting the biggest drops.

Companies are also having finding workers, with 12% saying they had experienced difficulties in recruiting employees. Hotels and restaurants struggled the most to find staff, as almost one in three (31%) firms in that sector reporting difficulties.

Read more: UK firms' growth to 'flatline' as cost of living crisis bites

A separate survey by the Bank of England revealed that UK businesses last month expected to raise their prices by 5.9% over the next year.

Companies expected to see wage growth of 4.8% over the coming year, the survey showed.

Watch: Why are gas prices rising?