The Economic Impact of Rising Costs in the UK
In January 2022, inflation reached its highest recorded level since 1992, affecting the affordability of goods and services for households and businesses alike. Since then it's continued to rise. In this blog article we take a look at the current cost of living crisis and the impact that rising inflation is having on the hospitality sector.
According to new analysis by iwoca, 71% of small business owners are worried about the impact of inflation on their operations this year. Inflation is on course to hit 7%+ over the coming months, which means higher costs across numerous areas, including staff recruitment and wages, raw materials and utilities.
Ofgem confirmed in February that the energy price cap would rise by 54% from April for approximately 22 million customers. This rise is the second major increase in energy bills in six months, and more rises are expected to follow, potentially pushing millions of households into fuel poverty for the first time. Such a rise will put further pressure on inflation rates and could hamper economic growth as prices across the supply chain continue to rise. Economists have warned that it is likely to heavily impact people's spending behaviour as they are forced to cut back on non-essentials to make their budgets go further.
It's not just energy prices that have seen an increase. Food costs are also rising because of higher import prices. Plus, the Bank of England is this week likely to raise interest rates for the third time since December to dampen soaring inflation.
The hospitality sector is already feeling the brunt of substantial increases in the cost of the essential goods and services they depend on to run their businesses. Such a noticeable increase in overheads is a devastating blow following a Christmas trading period devastated by Omicron. In fact, these in-cost rises could put a dent in the post-pandemic recovery of a sector already mired in debt and low on cash reserves.
As inflation rises and budgets tighten, people naturally spend less on leisure activities, as their purchasing power decreases. However, this squeezing of household budgets means simply passing these price rises directly on to consumers is not always advisable. Therefore, staying profitable whilst remaining competitive is a precarious balancing act.
Beacon understands that it's a worrying time for both our Suppliers and Customers alike. Unable to absorb costs anymore, many of our suppliers are already contacting customers regarding price adjustments. However, please be assured that Beacon works closely with our suppliers to check that price increases are justified and fair. We also negotiate to ensure that our customers receive the lowest possible rise from our partners - often far lower than the increases applied to their broader customer bases.
Our procurement experts are in constant contact with our partners, working collaboratively with them to look for solutions that will help our customers mitigate these price moves. From investigating product swaps to analysing your ordering and delivery behaviours, our team will support you in ensuring your supply chain is offering the very best value for your business - even during these volatile times.
So, get in touch now for a complimentary procurement audit. If there are savings to unlock or efficiencies to be delivered, we'll find them. Just drop us a line via Live Chat, and we'll be back in touch at a date and time that suits you.