Ahead of the Bank of England Policymakers meet this week, the U.K. expects half of its companies to increase prices to a record high as inflation concerns mount.
As per a survey conducted by Lloyds Banking Group Plc, nearly 45% of the U.K. business are expected to raise prices. This is sure to buttress the expectations of the market even as U.K. central bank will deliver the first interest rates hike post the pandemic on November 4. The businesses which were surveyed said they had no choice but to pass the rising input costs including staffing and raw materials to the consumers.
As per Bloomberg news, Huw Pill, the new Chief Economist of Bank of England, warned of inflation doubling more than the Central bank target to 5% plus. This is already 1 percentage point higher than the current Bank of England forecast.
The Lloyds survey also found that 48% of the companies in the U.K. feel that it is easier to hire people with the right skillset now. Most of them plan to bring back more than half of the laid-off workers indicating a robust job market.
This move will set aside concerns that employees receiving Government support would not be taken back by their erstwhile employers or those who do not have relevant experience for new jobs.
Some monetary policy committee members have suggested that rate hikes can wait till clearer unemployment data emerges after the end of the Furlough program. The flip side is that new findings will add to the expectations of tightening monetary policy.
Senior Economist at Lloyds Hann-Ju Ho said, “October saw a slight dent in optimism on the economy due to continuing supply chain issues and rising input costs. Companies are still buoyant as business confidence is high and long term it remains average”.
