The rate of inflation has hit 2.9 per cent in July 2026, up from 2.6 per cent in June, according to the latest data that has been published by the Office for National Statistics (ONS).
This is the first rise in the national rate of inflation since March 2026, with the increase in the energy price cap being partly to blame.
Businesses need to understand how this hike will affect them and what they must do to mitigate the issues.
How is inflation affecting businesses?
Higher inflation can increase the cost of running a business. Energy-intensive businesses and manufacturers are likely to feel the greatest impact, as rising energy prices can lead to higher production, transport and operating costs.
Many businesses are already dealing with tight profit margins and may find it difficult to absorb these additional costs.
Passing increased costs on to customers is not always straightforward, as consumers remain cautious about spending and may look for cheaper alternatives if prices rise too much.
Inflation can also affect employment costs. Employees may expect higher pay to help maintain their spending power, creating additional pressure on business finances.
With employment costs already rising, some organisations may take a more cautious approach to recruitment or delay planned investments.
What should businesses do to mitigate the impact of inflation?
With inflation remaining uncertain, businesses should review their budgets regularly and keep a close eye on cash flow.
Understanding where costs are rising most quickly can help businesses identify areas where savings or efficiencies can be made.
Businesses should also assess their pricing strategies to ensure they remain competitive while protecting profitability.
Investing in technology, improving efficiency and carefully managing expenditure may help reduce the impact of rising costs.
Strong financial planning and regular monitoring of business performance can help organisations remain resilient if inflation continues in the months ahead.
How can we help?
While the rate of inflation increasing to 2.9 per cent may not seem like a huge change, businesses must consider the impact that it will have on wider spending.
Our team can help you manage your cash flow by completing financial forecasting to ensure that your business stays resilient should inflation rates increase further.
