Consumers could feel the pinch for ‘many more months to come’

Rising costs across the UK economy are expected to keep pressure on household budgets for months, as businesses continue to grapple with higher energy bills, supply chain disruption and increasing raw material prices.

Industry groups have warned that many companies are now facing significant financial strain following ongoing instability in global markets. While some of the pressure has been linked to conflict in the Middle East and its impact on energy supplies, businesses say the effects are spreading across multiple sectors and are unlikely to disappear quickly.

Recent figures from the British Retail Consortium (BRC) show that shop price inflation increased in May, with furniture, health and beauty products among the categories experiencing the sharpest rises. Although supermarkets and retailers have used discounts and promotions to help limit the impact on shoppers, many warn that absorbing higher costs is becoming increasingly difficult.

“While retailers work hard to keep prices down for customers, they continue to face significant cost pressures, including higher energy bills and disruption linked to the conflict in Iran,” said Helen Dickinson, the BRC’s Chief Executive.

“Businesses cannot absorb these costs indefinitely, which risks pushing prices higher in the months ahead.”

The British Chambers of Commerce reported that only a small proportion of businesses have avoided the economic fallout entirely. Manufacturers, in particular, have been heavily affected by rising energy costs, more expensive imports and ongoing challenges within global supply chains.

Business leaders fear that continued increases in wholesale energy prices could eventually force more companies to pass costs directly on to customers. Some firms have also expressed concern about their ability to manage future energy bills if prices remain elevated.

Consumer groups and industry representatives are calling on the government to take further action to support businesses and reduce inflationary pressures. Suggested measures include lowering energy-related costs, cutting red tape and providing greater support for energy-intensive industries.

While inflation has eased compared with previous peaks, economists believe price pressures could remain a feature of the economy throughout the Summer and beyond.