Soaring Petrol and Energy Costs Are Forcing South West Firms to Hike Prices
The UK is experiencing high inflation and increasing energy and fuel costs, which have had a significant impact on businesses in the South West. Come learn more about the effects of the rising costs.
The UK is facing soaring inflation and rising energy and fuel costs that are reducing profit margins and forcing companies to raise their prices. Businesses in the South West have been hit hard, with many struggling to plan for the future.
The UK Faces the Biggest Rise in Consumer Price Inflation in 40 Years
July saw consumer price inflation in the UK rise past 10%, reaching its highest in four decades, according to figures released from the UK’s statistics office this August. According to the Office of National Statistics (ONS), the 10% increase in the UK consumer price index from July 2021 to July 2022 is the highest since the statistical model began in 1997. The country’s central bank has warned that this figure could rise further, with experts predicting that it may hit 12% by October. This significant level of inflation is hitting both consumers and businesses hard.
Prices of fuel and food are also continuing to rise. The one-month increase in petrol prices witnessed this year has not been seen since the 1980s, and staple foods including eggs, butter, milk, cheese, and vegetables have had dramatic cost increases.
Concerns Grow as Businesses Struggle to Plan for the Future
Businesses are already suffering from the effects of inflation as they face a plethora of price hikes. These increased overheads, combined with reduced consumer spending power, are putting many businesses in a challenging position, where their profit margin is threatened and businesses are unable to reliably plan for the future.
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In particular, business owners in the West Country are becoming increasingly worried about how inflation will impact the fate of their companies. A recent survey conducted by the Business West Chambers of Commerce revealed that around two-thirds of the 400 businesses questioned were worried about rising costs. This figure represents the highest proportion of businesses expressing concern over costs since the survey began in 2008.
Rising Costs Passed onto Consumers
Over half of South West firms surveyed reported that they had been forced to increase their prices over the last three months, and many planned to raise them in the next three months.
Shipping costs have almost doubled in the last 18 months, partly due to supply chain disruption brought on by the pandemic. Rising container rates are predicted to raise consumer prices further by 1.5% in 2023, according to a recent UNCTAD report.
Fuel prices are also at a record high in the UK, and energy costs have risen by 50% this year with expectations that they will rise by a further 80% in October. These rising costs are making it more expensive for businesses to run their operations, which is forcing them to pass on some of these costs to their consumers.
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