'More unwelcome news for hospitality' as inflation hits new 40-year high
The consumer price index rose from a previous high of 9.4% in June, according to the Office for National Statistics (ONS), and surpassed predictions that it would rise to 9.8%. The increase to 10.1% was driven by the rise in oil, gas and food prices.
Viv Watts, international property investor and co-founder of AGO Hotels, describes the figures as more unwelcome news for the hospitality industry.
“Up until now, to maintain competitive pricing, businesses have absorbed inflationary pressures rather than increase their prices for consumers,” he says.
“However, as costs are escalating faster than they have in three decades, businesses will now have no option other than to pass these on.”
It comes as CGA and Fourth’s new Business Confidence Survey reveals that hospitality leaders plan to raise menu prices by a further 6% in the next 12 months, having already raised them by an average of 9%.
The Bank of England recently announced a rise in interest rates from 1.25% to 1.75% and is expected to hike them further in an attempt to bring down inflation.
Watts adds that now more than ever the sector needs a reduction in VAT, a view shared by Neil Manhas, general manager, UK, and chief financial officer, Europe, for Pizza Hut UK and Europe.
“As we hit double-digit inflation, today's figures are just another stark reminder of how this is impacting business as usual,” he says.
“For hospitality, the pressure is even higher. With an endemic labour shortage crisis, supply chain disruption, and skyrocketing price rises across food, fuel, and utility supply chains – inflation is impairing the industry’s road to recovery.
“We know the key to resolving our economic difficulties is achieving growth, and hospitality is instrumental to this. Yet, amid such a backdrop, our industry needs to hear from our next prime minister about how they plan to tackle the cost-of-living crisis and prioritise business protection.
“For our sector, this includes lowering VAT for hospitality back to 12.5%, so businesses like ours can continue to deliver on our promise to generate jobs and look after our communities.”
