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A recent survey indicates that fewer British companies intend to increase their prices in the upcoming months. This trend could provide reassurance to the

Bank of England as it contemplates the possibility of cutting interest rates as early as next month.

In a positive development for the new Prime Minister, Keir Starmer, the British Chambers of Commerce (BCC) reported that 39% of member companies plan to raise prices in the next three months. This figure is a decline from 46% in the previous survey conducted in April.

"Business concerns about inflation have decreased to levels not seen since 2021," said David Bharier, head of research at the BCC. "A Bank Rate cut later this year would help lower borrowing costs."

Investors now see a better-than-even chance that the Bank of England will reduce its benchmark Bank Rate to 5.0% from 5.25% on August 1. This follows a recent drop in headline inflation to the central bank's 2% target and a general easing of inflationary pressures.

The BCC survey also showed that sales and cash flow improved in the second quarter of 2024, returning to pre-pandemic levels. Additionally, the percentage of firms expecting an increase in turnover in the next 12 months rose to 58% from 56% in April.

Despite these positive signs, 75% of respondent firms are still not increasing investment, though there are significant variations across sectors. For instance, 42% of transport and logistics firms reported increased investment, compared to only 19% of retail companies.

Prime Minister Starmer has expressed hopes that the promise of political stability, following 14 turbulent years under Conservative rule, will encourage more companies to invest.

The BCC survey gathered responses from 4,967 companies, 91% of which have fewer than 250 employees, between May 13 and June 10. Photo by Tristan Surtel, Wikimedia commons.