Despite a drop in overall UK price inflation to 10.1% in January from 10.5% in December, it remains high, with energy and food costs fuelling the spike, according to the latest figures from the Office for National Statistics.
BCC Head of Research, David Bharier, said: “A further easing in the rate of inflation to 10.1% continues a very slow move out of the peak.
“Household electricity and gas costs remain by far the biggest drivers, while transport costs saw a further easing. Producer price inflation, however, remains much higher at 14.1%.
“The stubbornly high rate means that we are now seeing a compounding effect on what was already a spiking inflation rate this time last year. The peak may have started to pass but prices have settled at a much higher level than two years ago.
“Most small firms remain hammered by rising costs from energy, raw materials, interest rates, taxation, and new trade barriers with Europe.
“The energy crisis, as the main driver of inflation, requires a clear policy solution. Small businesses need support to become greener and more energy efficient, and longer-term change in the energy market is required to avoid the large-scale market failure we are currently experiencing.
“Businesses are desperate for concrete action in the upcoming Budget across a range of areas. The issues of childcare and energy costs, in particular, must be solved to help unlock firms’ growth potential and control inflation.”