UK braces for price rises driven by Iran war as economic confidence plummets
Summary
Confidence in the UK economy has dropped sharply due to the effects of the war involving Iran. Businesses are facing higher costs and expect to raise prices, while consumers worry about a new increase in living expenses.Key Facts
- UK consumer confidence fell to its lowest level since October 2023 in April.
- The war in Iran is causing higher fuel and energy prices in the UK.
- UK service sector firms experienced the largest cost increase since 1996 between March and April.
- Manufacturing also saw rapid rises in raw material prices.
- Over 25% of UK businesses expect to raise prices next month, the highest share since January 2023.
- More than a third of businesses cite energy costs as a reason for planned price increases.
- Inflation in the UK is expected to rise sharply, possibly leading the Bank of England to raise interest rates.
- Despite challenges, UK services and manufacturing showed growth in April, helped by customers buying early to avoid future price rises.
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