Rising costs leave firms with 'stark choices'

By Rebecca Weller

- Last updated on GMT

Fix the source: tackling main drivers of inflation would reduce need for interest rate increases (Credit: Getty/DNY59)
Fix the source: tackling main drivers of inflation would reduce need for interest rate increases (Credit: Getty/DNY59)

Related tags Finance Interest rate Government Bank of england ukhospitality Legislation

Tackling the main drivers of inflation and offering hospitality firms “enhanced support” would “reduce the need” for interest rate increases, UKHospitality (UKH) chief executive Kate Nicholls has stated.

This comes as the Bank of England yesterday (Thursday 23 March) raised interest rates from 4% to 4.25%, following an “unexpected” increase to inflation​ earlier in the week.

Despite this, the bank's governor, Andrew Bailey, called on businesses​, including pubs, to refrain from increasing prices and trying to beat inflation in order to avoid fuelling it further, the BBC's Today programme reported.

Nicholls said: “The staggering rises in energy, food and drink costs over the past year have given hospitality businesses stark choices over whether to pass these costs through to consumers, in order to survive.

Fix the source 

“Unfortunately, as highlighted in [recent inflationary] figures, this is a contributing factor to the rate of inflation increasing once again.”

A surge in prices across hospitality made one of the largest upward contributions to the upswing in inflation, which rose by 10.4% in the 12-months to February 2023, according to the Office For National Statistics (ONS).

In addition, the most recent data from ONS showed beer prices had sky-rocketed by 11.8%​ in the 12-months to February this year.

Nicholls continued: “Tackling these main drivers of inflations would fix the source of the problem and enable venues to keep prices lower for consumers, stem the rate of inflation and reduce the need for further interest rate rises.

Concrete action 

“With energy supporting fading to almost nothing in April and bills set to increase by more than 80%, it is inevitable that price rises will follow.”

Data from the British Beer & Pub Association (BBPA) this week showed the average energy bill for a pub​ was set to rise by £18,000 when the Government’s energy relief for businesses ends later this month.

Nicholls added: “There is still time to avoid that by offering hospitality businesses an enhanced rate of support, as well as taking concrete action to penalise some unscrupulous energy suppliers​.” 

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