(Bloomberg) -- UK business confidence fell for the first time in three months as higher-than-expected inflation figures weighed on firms’ sentiment about the economy, a survey by Lloyds Banking Group Plc showed.

Lloyds Bank’s Business Barometer showed business confidence fell 5 points in May from the month before to 28%, driven the outlook for the wider economy. The net balance of companies expecting to raise prices in the next year dipped 1 point to 56%, well above the pre-pandemic average.

The survey suggests further upward pressure on prices, adding to concerns at the Bank of England about costs spiraling higher. That may add to the risk of further interest-rate increases.

“The economic environment remains challenging, compounded by stubborn inflation and higher wage pressures,” Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said in a statement Wednesday.

“However, while firms’ trading prospects and economic optimism both eased back, they still remain in positive territory as the UK has avoided an outright contraction in GDP — indicating a certain amount of underlying resilience in the economy,” he added.

The report also said staffing expectations edged down from a 10-month high, an indication that tightness in the labor market may be easing.

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