UK Businesses Prepare for Price Hikes Amid Energy Crisis

UK businesses are bracing for higher prices as energy costs surge, putting pressure on households to adapt. According to the Bank of England's Decision Maker Panel, chief financial officers surveyed from September 4 to 18 expect a 3.9% increase in their selling prices over the next 12 months, up from 3.1%. This is the strongest reading since June and reflects a growing trend of price hikes.

Almost six in ten companies plan to lift prices, with seven in ten expecting a deterioration in profit margins. However, majorities reported that sales, hiring, and wages will not be directly affected by these changes. Wage growth is expected to edge up to 3.5% from 3.4%, but inflation expectations remain high.

The energy shock is also hitting drivers hard, with the average price for diesel reaching £2 ($2.6) per liter, a rise of over 40% since the Iran war began. This development poses another challenge for the Bank of England as it considers how to manage the energy crisis.