Analysts believe that British businesses and households are likely to face further price increases without sufficient policy support.

LONDON, May 31 (Xinhua) -- British businesses and households are struggling to cope with rising prices amid the conflict in the Middle East. Companies are reducing investment and slowing hiring, while consumers are purchasing cheaper necessities and cutting discretionary spending, with further inflationary pressures expected ahead.

Recent data from the Office for National Statistics showed that job vacancies in the February-April period fell to their lowest level in about five years, while April retail sales recorded the steepest monthly decline since May 2025. Analysts believe that UK businesses and households are likely to face further price increases without sufficient policy support.

BUSINESSES CONCERNED ABOUT RISING COSTS

Research recently released by the British Chambers of Commerce (BCC) found that 80 percent of surveyed firms reported either an existing or anticipated impact from the conflict, including higher energy prices, shipping disruptions, and rising raw material costs.

"Shipping costs are higher, and routes and transit times are unpredictable. Flights to visit suppliers and customers in Asia are now more expensive as routing options have diminished," the BCC quoted respondents as saying. Firms also reported supplier price increases under force majeure clauses, with costs rising by between 3 percent and 30 percent within just a few weeks.

Rajneesh Narula, a professor at the University of Reading, said that, in addition to manufacturing and agriculture, Britain's services sector -- a key pillar of the economy -- is also being affected by logistical disruptions. Rising transportation costs have begun feeding directly into prices on the high street, he added.

Energy costs remain one of businesses' main concerns. According to the survey, 75 percent of firms expect their energy bills to increase over the next 12 months, with most anticipating rises of more than 20 percent. Meanwhile, 36 percent expect difficulties paying their energy bills during the same period.

William Bain, head of Trade Policy at the BCC, said that even if the current ceasefire signals a swift end to the conflict, the economic repercussions will be felt for many months.

John Bryson, a professor at the University of Birmingham, told Xinhua that the conflict is challenging the UK's economic sovereignty. Access to energy and its rising cost are dampening economic growth, he said, adding that the near future is likely to bring higher inflation and significant pressures related to resource constraints.

HOUSEHOLDS FEELING THE SQUEEZE

Like businesses, British households are facing the dual pressures of rising living costs and shrinking job opportunities. There are already signs that concerns about the conflict and its impact on household finances are prompting consumers to curb spending in many areas, according to Harvir Dhillon, an economist at the British Retail Consortium.

"Everything has gone up in price -- food, gas, and electricity. When I go shopping, I have to look for bargains, and I also buy less food because food prices have risen the most," Carol Noble, a resident of Liverpool, told Xinhua. "Life is much more of a struggle than it was a year ago, or even a few years ago."

Although inflation in April rose more slowly than expected, aided by the government's energy bill support package, many analysts view this as only a temporary respite before a new wave of conflict-driven inflation.

Steve Nolan, an economist at Liverpool John Moores University, said that if the Strait of Hormuz remains closed, inflation could rise to between 4 and 5 percent.

Patrick Minford, a professor at Cardiff Business School, told Xinhua that the rising cost of living resulting from the conflict is likely to prompt tighter monetary policy and could generate recessionary pressures that slow economic growth and affect households.

MORE POLICY SUPPORT NEEDED

In late May, the British government announced a package of measures to support households and businesses facing higher costs linked to the conflict. These measures include funding for strategically important producers facing elevated energy costs, the suspension of tariffs on certain food products sold in supermarkets, an extension of the bus fare cap, and a reduction in value-added tax on summer attractions.

John O'Connell, chief executive of the TaxPayers' Alliance, said taxpayers would see through the plan as little more than a temporary fix.

Whether energy-related support will be sufficient for energy-intensive businesses depends on how long the energy shock persists, said Liza Jabbour, a professor at the University of Birmingham. If the conflict continues and energy prices keep rising, the current support package may prove inadequate, she added.

Since there is no price cap on business energy costs, most British firms remain vulnerable to volatility in global energy markets despite government relief measures for major energy users, Bain argued.

Kate Shoesmith, director of Policy at the BCC, called for further measures to reduce business costs, noting that the cost of living and the cost of doing business are two sides of the same coin. Raising productivity should be the long-term solution to addressing both challenges, she said.