{"id":143272,"date":"2025-09-17T12:23:17","date_gmt":"2025-09-17T12:23:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/143272\/"},"modified":"2025-09-17T12:23:17","modified_gmt":"2025-09-17T12:23:17","slug":"inflation-warning-as-firms-say-theyve-been-holding-off-passing-on-high-costs-for-now","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/143272\/","title":{"rendered":"Inflation warning as firms say they’ve been holding off passing on high costs… for now"},"content":{"rendered":"

Businesses face cost inflation at three-month high in August, Lloyds says\u00a0Report comes as ONS figures reveal CPI inflation at 3.8% in August\u00a0<\/p>\n

By MIKE SHEEN, BUSINESS EDITOR<\/a> <\/a> <\/p>\n

Updated: 02:50 EDT, 17 September 2025 <\/p>\n

British businesses have seen their costs rise in recent months, but most have so-far refrained from passing inflationary pressures onto customers with higher prices, new data suggests.<\/p>\n

Analysis conducted by Lloyds shows firms are shouldering higher input costs while the vast majority of industries also continue to face lacklustre demand.<\/p>\n

The report arrived as fresh fogures from the ONS revealed consumer prices index inflation remained stuck at 3.8 per cent in August, well above the Bank of England’s 2 per cent target.\u00a0<\/p>\n

And firms could soon ramp-up price hikes if their costs increase further \u2013 thereby continuing to feed the overall rate of inflation.<\/p>\n

Lloyds\u2019 UK Sector Tracker shows the overall rate of business cost inflation rose to a three-month high in August, with eight out of 14 sectors reporting that costs rose at a faster pace than the month before.<\/p>\n

Businesses raised prices, with seven sectors doing so faster than in July, but profit margin data shows 13 did not opt to pass on the full extent of price rises to their customers.<\/p>\n

Food and drink manufacturers increased the prices they charged to customers at a significantly slower rate than in the previous month, Lloyds said, despite their own cost inflation accelerating, while demand and output contracted.<\/p>\n

\"Food <\/p>\n

Food and drink manufacturers increased the prices they charged to customers at a significantly slower rate than in the previous month<\/p>\n

Separate data from Worldpanel by Numerator on Tuesday showed supermarket inflation <\/a>eased from 5 per cent in August to 4.9 per cent in September.\u00a0<\/p>\n

Wage inflation and higher employer national insurance contributions have been a major driver of increased business costs this year.\u00a0<\/p>\n

This has also led to a softening in the labour market, with industries like retail cutting thousands of jobs, according to Office for National Statistics data.\u00a0<\/p>\n

Chancellor Rachel Reeves has been urged by business leaders across the economy not to further burden firms with higher taxes in her 26 November budget.\u00a0\u00a0<\/p>\n

Nikesh Sawjani, senior UK Economist at Lloyds, added: \u2018Businesses\u2019 costs continue to rise, and the Tracker shows firms aren\u2019t passing the full extent on to customers.<\/p>\n

\u2018This could help moderate spikes in inflation for now, although businesses might reconsider their strategies if cost increases accelerate further or demand conditions improve.\u2019<\/p>\n

Lloyds\u2019 UK Sector Tracker showed demand measured by new order volumes grew in four out of 14 UK sectors in August \u2013 three more than in July and the highest number of sectors since November last year.<\/p>\n

For a fifth successive month, software and services grew at the fastest rate of any sector monitored, with activity growth reaching a 40-month high.<\/p>\n

However, August also marked the 12th successive month where demand softened in more than half of the 14 UK sectors tracked.<\/p>\n

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\n Inflation warning as firms say they’ve been holding off passing on high costs… for now<\/p>\n