One third of UK companies report higher input costs

One third of trading UK businesses reported an increase in purchase costs during September, according to the Office for National Statistics’ Business Insights and Conditions Survey. The measure captures how many businesses experienced higher prices, not the rate of inflation in their costs. The proportion reporting higher input prices reached 33%, up four percentage points from August and twelve points from a year earlier.

The Office for National Statistics found that 12% of trading businesses reported raising the prices of the goods and services they sold during September. That figure was broadly unchanged from August, although three percentage points higher than September 2025. The difference between firms’ input and selling-price responses helps illustrate pressure on operating margins, but it does not measure the size of a particular company’s profit reduction.

Construction companies reported especially widespread increases in purchase costs: 52% said prices had risen, eight points more than in August. The sector can be exposed to materials, transport and energy costs, with changes affecting quotations and contracts agreed months before goods are required. Whether a business can recover additional expenditure depends on how its contracts distribute inflation risk.

Wholesale and retail companies were the most likely to report higher selling prices, at 26%. That category may reflect a range of conditions among food retailers, wholesalers and other merchants. It should not be assumed that every business reporting an increase raised prices by the same amount or that every retail product became more expensive.

Looking ahead, 17% of trading businesses expected to raise their selling prices in November. Energy was the most commonly cited factor behind consideration of an increase, selected by 32%. The energy-related figure had risen from the previous month and year, with especially high responses in accommodation and food services and manufacturing.

Concerns were broader than immediate invoices. In early October, 72% of businesses expressed at least some concern over increases in fuel prices, while 70% did so for energy costs. Fifteen per cent identified energy prices as their main concern for November, compared with a smaller proportion earlier in the year. These responses reflect perceived risk as well as current expenditure.

The survey also suggested mixed trading performance. Seventeen per cent reported higher turnover in September than August, compared with 25% reporting a reduction. Among employers with ten or more staff, 26% reported a rise in turnover. Differences in business size and industry therefore affect how the headline findings should be read.

For companies operating on fixed-price contracts, an increase in purchased services or raw materials can be particularly difficult to recover. A manufacturer may have committed to a sale price in advance, while a hospitality operator can face customer resistance if menu prices change frequently. Others can offset part of the increase through productivity improvements, switching suppliers or altering purchasing schedules.

The survey is not a direct substitute for the official consumer price index or producer price inflation statistics. Businesses report whether costs rose or fell, rather than providing a comprehensive weighted index of inflation rates. The findings come from a voluntary business survey and are classified as official statistics in development, so sampling and response uncertainty should be acknowledged.

Business size changes the options available for responding to cost increases. Larger companies may renegotiate high-volume supply contracts or hedge energy costs, while smaller operators can have limited bargaining leverage and short cash reserves. Even within one sector, the timing of contract renewals creates different exposures. The ONS results aggregate those circumstances, making them useful for a broad picture but less suitable for predicting an individual company’s prices.

The ONS conducted the latest survey wave between 5 and 18 October. Its results give a timely view of companies’ operating conditions as the Budget approaches, but cannot determine the effect of measures announced after respondents completed their questionnaires. Future waves will show whether concerns turn into more widespread price rises or whether margins continue to absorb the pressure.