British firms have reported signs of easing price pressures, even as interest rates rise on the back of the country’s stubbornly high inflation.

Fewer than half of UK companies expect to lift prices over the next three months, a survey by the British Chambers of Commerce revealed.

The figure dropped to 45% in the second quarter of the year, from 55% in the first quarter. It’s the first time it’s been under 50% since 2021.

Wage pressures are now the main inflationary force for businesses, the BCC said, rather than energy or material costs. More than 5,000 companies responded to its survey.

Pledge

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. Economists at JPMorgan Chase & Co. believe the Bank of England could hike interest rates to 7% to get it under control.

Still, businesses have seen some signs of easing pressures. J Sainsbury Plc’s Chief Executive Officer Simon Roberts said this week that food inflation was falling, echoing comments by Ken Murphy, the boss of Tesco Plc, last month.

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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.”

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.”