Businesses have suffered a trade slump and a sharp drop in cash reserves as economic pressures mount, according to new data.

More than a quarter of companies said their turnover decreased in September, reflecting slower trade and reduced sales, the Office for National Statistics (ONS) found.

The hospitality industry suffered the biggest declines last month as businesses face higher costs and waning demand from cash-strapped consumers.

More than half of companies in the accommodation and food services sector said that turnover dropped in September, compared to August – double the average across all sectors.

A startling amount of companies also revealed that they have limited cash reserves should there be a need to access emergency funds.

More than a tenth of businesses said they had no cash reserves at all in early October, while 28% said they had three months or less.

The figure rises significantly for companies in the education industry, 51% of which reported having either none or limited cash reserves.

UK business are being racked which higher costs which they say has continued to rise in recent months, the ONS’s data showed.

Just under half of companies reported an increase in the prices of goods and services bought in September compared with August, up from 44% who said so in the previous month, showing that cost inflation has stayed on an upward trajectory.

The UK’s Consumer Prices Index inflation reached 10.1% in September, hitting a 40-year high for the second time this year

It has been largely driven up by surging food and drink prices, the ONS said on Wednesday, with dairy and meat costs particularly taking a hit.

But businesses say energy prices are having the most impact.

Nearly two fifths of companies said that higher energy bills are the main reason why they are considering raising their prices from November, surging to three quarters of firms in the accommodation and food service sector.

Around a third of businesses said they are not considering raising their prices.

It comes as the Government has pledged to support households and businesses with their energy costs, although the support measures are due to wind down from April next year when a more targeted approach will set in.

The combined pressures have weighed heavy on business confidence with a quarter of firms reporting that their performance had decreased in September compared to the same month last year, the ONS said.