British companies issued a record number of profit warnings because of rising costs at the start of the year as inflation began to bite.

The number of warnings, which are issued by companies to warn stock markets that their profits will decline significantly, rose by 44 per cent in the first three months of the year compared with the same period of last year.

A record 43 per cent of warnings issued by UK-listed companies in the first quarter of the year were due to rising costs eating into profit margins, according to research published by EY-Parthenon. This figure has risen from 27 per cent at the end of last year and is well above the average of 10 per cent for the past decade, when inflation remained low and stable.

Companies issued 72 warnings over the three months, with customer-facing sectors such as hospitality and retail suffering the greatest setbacks.