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A survey shows that more UK firms are expecting to increase prices in the next three months.
The British Chambers of Commerce said its survey was showing signs of weakness. Three in four firms don't plan to increase investment, and more than a quarter think profits will go down.
According to the findings, the highest inflation rate in four decades is likely to rise further as firms pass on higher energy, fuel and wage bills. It is feared that the blow to business investment and consumer spending will cause the economy to go into recession.
The economic dashboard has red lights on it. The indicators have deteriorated since our last survey. Business confidence has taken a hit and fears over inflation and cost pressures are at an all time high.
The Bank of England will be concerned by the prospect of further price increases as they try to stop an inflation rate that is set to hit double digits by the end of the year.
Almost two-thirds of firms now expect their prices to go up in the next three months, the highest proportion since 1997. Retail, wholesale, construction and engineering, and production and manufacturing make up 80% of that.
Survey respondents cited higher energy prices, wage bills, fuel and raw material costs as reasons for upcoming price hikes.
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