UK businesses are facing their sharpest inflation pressures in three years, driven by soaring energy, fuel and raw material costs. Accountancy and advisory firm BDO reported that its inflation index reached 103.65 in September, up from 102.18 in August and the highest level since June 2023. The firm warned that these elevated costs, combined with weakening demand, are squeezing company margins ahead of the Autumn Budget.
Manufacturing and services output both fell last month as domestic demand softened, BDO found. The firm quoted a blunt message from businesses: cost pressures continue to erode profits, hiring plans remain cautious and growth is levelling off. BDO said firms are seeking certainty rather than major policy interventions, with concerns about further downside risks currently outweighing hopes of positive developments.
Oil prices edged lower after reports that Ukraine and Russia had agreed to halt attacks on each other's energy infrastructure. Brent crude stood at $104.46 a barrel, down just 0.25%, after earlier falling around 2%. Kyle Rodda, senior financial market analyst at Capital.com, cautioned that the impact would be limited, noting that Middle East refining capacity remains heavily compromised and Ukrainian strikes on Russian refineries continue.