INFLATION will remain “sticky” in 2026 as over half of businesses are expected to raise prices this year, as experts warned that the data is “worrying”.
The British Chambers of Commerce’s (BCC) latest Quarterly Economic Survey (Q4 2025) reports that 52% of firms expect to raise prices over the next three months.
The BCC says this forward-looking measure signals inflationary pressure remains “embedded”, implying the path back to stable inflation in 2026 may be uneven and could argue for caution on the pace of Bank of England rate cuts.
Experts warned that “the problem is embedded rather than solved” and the Bank of England will be forced to deal with both inflation and recession in 2026.
Prices are still proving sticky
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, said it was “worrying” that prices are not coming down.
She added: “If you look out on the high street and in people’s bank accounts, the story is pretty simple: the UK consumer is skint. The middle of the country has been taxed to the hilt, debt is high, and people are not spending like they used to. That is classic disinflationary, even deflationary, behaviour.
“And yet prices are still proving sticky. That is the worrying bit – not whether inflation prints ‘a bit lower’ for a month or two, but that we are struggling to get it convincingly under 3% even when demand is this weak.
“To me, that says the problem is embedded rather than solved. The Bank of England has two problems to juggle: inflation and recession. In the real world they will try to stave off recession, because a bit of inflation makes the debt maths easier.”
This statistical victory will simply be gaslighting
Kundan Bhaduri, Entrepreneur, Investor and Landlord at London-based The Kushman Group, said while inflation may come down this year, it’s not something to celebrate.
He continued: “We are indeed likely to see the headline rate dip towards this arbitrary figure by the summer but for the average household this statistical victory will simply be gaslighting.
“We will be told to celebrate because prices are rising slower than before yet the cost of living remains permanently etched at a painfully high plateau. While the headline rate will drift down as volatile energy prices fall out of the index the core inflation in services and wages continue to remain stubbornly sticky.
“Achieving the two percent target by crushing growth and suffocating the private sector with high interest rates is sadly no success for a government that came to power on the back of easing the burden for the ‘working people’, whatever that be.”
Demand trap
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said GDP growth will be affected if inflation comes down.
He added: “What this boils down is the UK going into recession in 2026. The BCC’s report of 52% of firms planning price hikes signals that ‘sticky’ inflation remains a major hurdle for 2026. Whilst headline rates may dip, domestic price pressures are becoming embedded, likely forcing the BoE to maintain higher interest rates for longer to prevent a new inflation spiral.
“Households and SMEs will be the primary losers in this scenario. Consumers face a continued squeeze on disposable income as real wage growth stalls, while SMEs, lacking the scale to absorb rising overheads risk losing market share or facing insolvency.
“Weak consumer demand will act as a natural ceiling. With 68% of firms operating below capacity, many may find they cannot actually implement planned hikes without collapsing sales. This ‘demand trap’ could accelerate the return to the 2% target, but likely at the cost of stunting GDP growth.”
