Kate Nicholls sounds warning over cost price inflation

By James McAllister

- Last updated on GMT

Hospitality businesses 'anticipating three price increases' before April 2022

Related tags: Inflation, Supply chain, Recruitment

MPs have been told some hospitality businesses expect to raise prices three times before April next year, amid significant cost price inflation caused by ongoing supply chain and recruitment issues.

Appearing before the Environment, Food and Rural Affairs Committee yesterday (9 November), UKHospitality chief executive Kate Nicholls warned that as well as being hit by price rises, consumers can also expect many hospitality venues to not run at full capacity over the festive period.

She told MPs that venues are experiencing a 'double whammy' of problems in recruitment and the supply chain, with a quarter of UKHospitality members having had to reduce opening hours, close venues and refuse bookings as a result.

“It is the cruellest of ironies that at the point at which you are reopening, [with] a desperate need to rebuild cash reserves, shattered balance sheets and trade your way out of this… your ability to do that is constrained by the fact you don’t have access to sufficient labour and revenues are supressed by about 15-20% in the sector, simply because of labour shortages in our businesses and the supply chain,” she said.

Nicholls warned that an inability to raise prices ahead of Christmas would lead to inflationary pressure that would directly translate into higher prices in the new year. 

She said: "For a lot of our Christmas activities, a lot will be sold and rolled over from last year, so the price is more inflexible.

"Therefore you’re going to see a really intense squeeze on margins in the run-up to Christmas, and then an inevitable impact felt by consumers because it will have an inflationary effect."

Significant cost price inflation coming through the supply chain will likely hit consumer prices after Christmas, she added.

“Some of our businesses are anticipating three price increases going through before we get to April.”

Related topics: Business & Legislation

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