Two-thirds of small firms have raised their prices multiple times over the past year, with many expecting to increase them further, according to new research.
Persistent price rises
The Federation of Small Businesses (FSB) found that 67% of small businesses have increased prices repeatedly since the start of 2023. Of those, 39% have done so three or more times. The main drivers cited were rising energy costs, higher supplier prices, and increased wages.
More than half (55%) of small firms said they plan to raise prices again in the next three months. The FSB warned that the trend is contributing to stubborn inflation and squeezing consumer spending.
Impact on businesses
FSB national chair Martin McTague said: “Small businesses are being forced into a cycle of repeated price hikes, which is damaging their competitiveness and customer relationships.” He called for government action to reduce business rates and energy costs.
The survey of 1,100 small businesses also found that 74% reported lower profit margins than a year ago, while 28% said they were considering reducing staff hours or headcount.
Economic outlook
Economists say the persistent price increases could keep inflation above the Bank of England’s 2% target for longer. The central bank has held interest rates at 5.25% since August, but markets expect cuts later this year.
However, the FSB warned that without support, many small firms may not survive. “The cumulative effect of these price rises is a ticking time bomb for the UK’s small business community,” McTague added.
