Companies have reported signs of easing price pressures even amid talk of interest rates rising to 7% to tackle the UK’s stubbornly high inflation.

Those expecting to lift prices over the next three months has fallen to 45% in the second quarter from 55% in Q1, according to a survey by the British Chambers of Commerce. It is the first time it has fallen below 50% since 2021. 

Wage pressures have overtaken energy and material costs as the main inflationary force for businesses, the BCC said.

Inflation in the UK has remained higher than expected in recent months, threatening Prime Minister Rishi Sunak’s pledge to halve the rate by the end of the year.

The BCC results emerged as economists at JPMorgan Chase & Co. believe the Bank of England could hike interest rates to 7% to get inflation under control.

Allan Monks, economist at JP Morgan, said its main forecast was for the bank rate, now 5%, to peak at 5.75% in November, but that it could be forced to rise further.

He said high inflation was in danger of becoming “entrenched” if “households keep pushing for higher wages and firms seek to protect their profit margins”. The fact that so many homeowners were on five-year fixed-rate mortgages meant that the 13 consecutive rises in the bank rate since December 2021 had had less of an impact.

Director General of the BCC Shevaun Haviland warned that “there is a fine balancing act to be struck here. Push too hard on interest rates and there is a real danger that the long-term outlook for economic growth and prosperity will be dented.”

Ms Haviland also said changes to trade rules with the European Union would contribute to upward inflationary pressure, urging policymakers to “think carefully about adding in further costs for businesses when they are already under strain.”

Sainsbury’s chief executive Simon Roberts said this week that food inflation was falling, echoing comments by Ken Murphy, the boss of Tesco, last month.