Rising inflation 'has potential to seriously derail sector’s recovery'

By James McAllister

- Last updated on GMT

Rising inflation 'has potential to seriously derail sector’s recovery'

Related tags: Inflation

UKHospitality has warned that rising inflation has the potential to 'seriously derail' the sector’s recovery.

While the latest figures from the Office for National Statistics (ONS) show that inflation temporarily dipped in September to 3.1%, from 3.2% in August, real estate adviser Altus Group has warned that the headline rate signals that gross business rates bills next year will rise by £23.15m for pubs in England, whilst restaurants and cafes will see their liabilities increase by £21.87m, unless the Government intervenes in the Budget later this month.

There have also been serious warnings of food price increases, with Ian Wright, chief executive of the Food and Drink Federation, telling MPs earlier this week that inflation is between 14% and 18% for hospitality firms.

Describing the figure as 'terrifying', he warned that price rises for food firms' ingredients will lead to consumer price rises.

Kate Nicholls, chief executive of UKHospitality, has warned that the latest inflation figures are extremely concerning for the sector, with costs for hospitality businesses across all lines rising by 11-13%. 

She said: "Such rising costs have the potential to seriously derail the sector’s recovery – and its ability to boost national recovery – due to a heady cocktail of substantial increases in the cost of essential goods and services crucial to their businesses.

“Combined with suppressed sales due to labour shortages, it is inevitable that businesses will have no choice but to pass on some of this pressure to their customers through higher prices.

"Consequently, we urge the Chancellor not to compound matters with tax increases in the form of business rates and a return to historic rates of VAT. 

"Locking in the 12.5% rate of VAT for the long term for hospitality will avoid building in more sustained inflationary pressures across the economy.”

Research published by CGA and Fourth last month revealed that three quarters of hospitality businesses are likely to raise prices for consumers as a result of rising costs​ and supply chain problems.

Meanwhile, earlier this week a poll conducted by The Morning Advertiser​ - BigHospitality​'s sister site - found that some 81% of pub operators are increasing prices in their businesses​ this year.

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