London cost of living soars as firms raise prices amid inflation crunch
Londoners’ cost of living is rising rapidly driven by the capital’s firms hiking prices at the quickest pace ever to stay afloat amid swelling costs, reveals a closely watched survey released today.
Businesses across the capital and the UK are being stung by a higher tax burden and swelling operating costs on top of trying to repair their balance sheets after the pandemic dealt a heavy blow to their financials.
As a result, London companies have launched the steepest price hike cycle since records began a quarter of a century ago, according to NatWest and S&P Global’s purchasing managers’ index (PMI) for last month.
Businesses’ costs climbed at the second quickest pace on record in March.
Russia’s invasion of Ukraine has sent energy and raw material prices soaring, adding to existing cost pressures emanating from the UK jobs market that were already hitting firms’ bottom lines.
The government has saddled firms with a 1.25 percentage point national insurance hike, while hospitality firms are having to pay the normal 20 per cent rate of VAT after a pandemic relief scheme ended.
Activity among London businesses remained high at 63.5, up from 63, indicating consumers are still willing to swallow higher prices. The cost of living squeeze is expected to cool the London PMI in the coming months.
Business confidence in the capital shrank to a 17-month low on fears consumers will cut spending amid the worst cost of living squeeze since the mid 1950s.
“The threat of an inflation-led slowdown appeared to hit business confidence during March,” Sarah Bilby, at NatWest, said.