UK inflation hits 3.5% as small firms face “pressure from both sides”
By Liam Buckler ·
UK inflation rose to 3.5% in the 12 months to September after petrol and diesel prices surged, as one small business owner told Newspage he is facing “pressure from both sides”.
According to the Office for National Statistics (ONS), the Consumer Prices Index (CPI) annual rate was up from 3.1% in August.
Core CPIH (CPIH excluding energy, food, alcohol, and tobacco) rose by 3.1% in the 12 months to September 2026, up from 2.9% in August; the CPIH goods annual rate rose from 2.7% to 3.2%, while the CPIH services annual rate rose from 3.6% to 3.9%.
Tony Sanchez, Founder at Bridging Loan Director, said his business is being squeezed from both sides, with running costs rising while advertisers take longer to commit.
He commented: "As a small publisher running Bridging Loan Directory, I’m seeing pressure from both sides: our running costs are rising, while advertisers are watching their budgets more closely and taking longer to commit. That makes planning harder. Interest in working with us doesn’t necessarily disappear, but the decision takes longer, and we still have costs to meet while we wait.
“Another rise in inflation is frustrating because it adds uncertainty for us and our customers. Small businesses need enough confidence to make spending decisions, whether that’s advertising, hiring or investing in their websites. For the Budget,
“I’d like to see predictable costs, simpler administration and fewer surprises. Give small firms some breathing room and a clearer basis for planning. We spend too much time working around uncertainty when we could be getting on with growing our businesses."
Michelle Lawson, Director at Fareham-based Lawson Financial, warned that inflation is putting further pressure on household budgets and business finances, and the situation is becoming unsustainable in the long term.
She commented: “Most people are feeling this. The cost of everything is increasing at a rate of knots but the money in your pocket is diminishing. The political and economic instability is having a direct knock-on with rising costs passed on. Something needs to give in the Budget as this is unsustainable long term.”
Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, warned that rising inflation will push up wage expectations and could force the Bank of England to act.
He commented: “As inflation rises so will wage increase expectations and we will be back into a cycle where the Bank of England will be forced to act. This isn’t good news for households. This isn’t good news for businesses. This isn’t good news for borrowers.”
Matt Coulson, Founder at Rickmansworth-based Heron Financial, said small businesses need certainty from the Budget.
He commented: "For a mortgage business like ours, the direct cost of inflation matters, but the bigger hit is indirect. A 3.5% print keeps interest rates higher for longer, and that keeps the housing market subdued, which is felt across everyone who depends on people moving.
"So inflation reaches us through our clients as much as through our own bills. My reaction is that the detail is more worrying than the headline.
"This isn’t just fuel any more. Core and services inflation have both risen too, so it’s broadening out, which makes it stickier and pushes any rate relief further away. On the Budget, what small businesses need most is certainty and no fresh costs piled on top.
“We’re already carrying higher employer costs and an uncertain outlook, and that’s what makes firms hesitate on hiring and investment. Give us stability and a clear direction, and plenty of us will get on and grow".
Stephen Perkins, Norwich Mortgage Broker and Managing Director at Norwich-based Yellow Brick Mortgages, believes firms cannot keep passing rising costs on to customers.
He commented: "Persistent inflation makes every business decision more expensive, from wages and suppliers to borrowing and investment. The problem for SMEs is that you cannot simply keep passing every increase on to customers, so eventually margins take the strain.
“What businesses need from the Budget is stability rather than another round of unexpected costs. Employers can plan around known taxes and costs; it is constant change and uncertainty that makes businesses hesitate over hiring and investment".
Ben Perks, Managing Director at Stourbridge-based Orchard Financial Advisers said costs are rising across businesses, with many facing a challenging time.
He commented: “Running a business in the UK feels like a white-knuckle ride. Every cost around you is rising, and the money coming in isn’t keeping pace. It’s a challenge that’s faced by multiple industries and with the Budget around the corner it’s a nervy time for directors".
Rupert Collingwood, Founder at The London Broker, believes home buyers are thinking twice before committing to moving home.
He commented: "Another day, another kick in the shins for the housing market. Stubborn inflation is giving consumers every right to be cautious about how they spend their money day to day. Would-be home movers are thinking twice currently before committing to a move which for the majority involves upsizing and taking on more debt.
“For businesses working in the housing market, this is reducing transaction volumes and trade. Government really needs to get a grip on this, including doing what it can to reduce the impact of fuel prices and the cost of living for everyone, not just their pet groups.”
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