A business survey released on Tuesday shows why the Bank of England may raise interest rates, as the cost for firms in Britain's services sector is rising at the fastest rate in over 20 years.
The quarterly survey of businesses and consumer services companies showed the quickest growth in costs since the survey began in 1998, according to the Confederation of British Industry.
According to Lloyds Bank, a record number of businesses plan to raise prices and a quarter of them expect to raise pay by 3% or more over the next 12 months.
CBI economist Charlotte Dendy said that record growth in costs is threatening to put a winter freeze on the service sector recovery next quarter.
Both surveys took place in the first half of November before the news of the Omicron variant of COVID 19 hampered the confidence of financial market investors who now see a 60% chance that the BoE will raise rates in December.
In October, British consumer price inflation hit a 10 year high of 4.2% and the BoE expects it to reach nearly 5% next year.
In the short run, higher interest rates will not reduce pressure due to a surge in energy prices and supply chain difficulties. They may reduce the knock-on effects that would come if companies increase prices and workers ask for higher pay in anticipation of higher inflation.
Tuesday's CBI data showed businesses are already thinking that they will not be able to pass on higher costs in full. Profit growth is expected to stall over the next three months for services firms due to the rise in costs, although average selling prices are expected to rise by a record amount.
The CBI has had the fastest hiring since 2015 by business and professional services companies.
The recruitment data from Indeed showed that vets, optometrists, auditors, animators and truck technicians were the roles that their customers were finding it hard to fill.