News / Press release / Economy

‘Endless’ business cost rises risk inflationary spike

The rate of inflation rose to 4%, according to the Office for National Statistics, an increase from the previous rate of 3.9%.

Hospitality was outlined as the highest contributor to growth in the inflation rate, contributing 0.8% of the 4.2% CPIH increase. This slightly higher rate of inflation includes homeowners housing costs.

This demonstrates how cost increases for businesses in the sector are driving the overall rate of inflation.

Our response

Kate Nicholls, Chief Executive of UKHospitality, said: “This rise in inflation, albeit slight, will come as no surprise to those of us that have been warning the endless rise in business costs risks an inflationary spike at the start of this year.

“With inflation having fallen steadily over the past year, the high business costs that remain a significant part of the economy risk reversing this downward trend.

Action needed

“Hospitality is the highest contributor to the growth in the inflation rate this month and with business rates and the National Living Wage set to increase in April, hospitality venues will have no choice but to pass these costs onto consumers, once again fuelling inflation.

“Businesses have absorbed costs as much as they can but with food inflation remaining at 15%, wage costs continuing to rise and the impact of the cost of living being felt in customer demand, they can do so no longer.

“We need action to mitigate these cost increases.

“In the short-term, the Government should cap the business rates hike due in April. Looking to the years ahead, a reduced rate of VAT for hospitality will increase demand, grow sales and keep prices low.”