Almost half of UK companies expect to raise prices: Lloyds

Bloomberg

Almost half of UK companies expect to increase prices, a record high, adding to inflation concerns that will weigh on Bank of England policy makers ahead of their meeting this week.
A survey by Lloyds Banking Group Plc showed 45% of businesses expect to raise prices, which will buttress market expectations that the UK central bank will deliver its first post-pandemic rate rise on November 4. The businesses surveyed said they would need to pass on rising input costs — including for raw materials and staffing — to consumers.
The BOE’s new chief economist, Huw Pill, had already warned that inflation could exceed 5% in the coming months, a percentage point higher than the current BOE forecast, and more than double the central bank’s target.
Lloyds also found that 48% of UK companies said it had become easier to hire people with the right skills, and almost all planned to bring back more than half of furloughed workers, indicating strength in the jobs market.
That will temper concerns that staff who had been receiving government support would not be taken back by their old employers or have the appropriate experience to find new jobs.
The monetary policy committee’s more dovish members had suggested that it would be wiser to wait for clearer data on unemployment after the end of the furlough program before hiking interest rates, but the findings will add to expectations of a monetary policy tightening.

UK Job Market May Be ‘Alarmingly Tight,’
The UK labour market may be “alarmingly tight” and could stoke wage pressures, Office for Budget Responsibility member Charlie Bean told lawmakers.
In testimony to the House of Commons Treasury Committee, Bean said the Bank of England would have little choice but to raise interest rates if the end of the furlough scheme does not bring more workers into the jobs market.
Bean is a former deputy governor and chief economist of UK central bank. The BOE will release its verdict on the labour market, when it announces its interest-rate decision. Traders are expecting an increase from 0.1% to 0.25%, the first rise by a Group of Seven nation.
With vacancies running at a record high, a shortfall of workers will drive up pay. The OBR, government’s fiscal watchdog, estimates there were around 200,000 people on furlough who are now looking for jobs, following the end of the wage-subsidy program on October 1.
The OBR also assumes that some of the workers who went into inactivity now start coming back, and that some migrants who left the country begin to return. Unless labour shortages ease, Bean warned, the cost of servicing the national debt could rise by 30 billion pounds ($41 billion) a year if inflation peaked at 5.4% and interest rates hit 3.5%.