Inflation Up Again: Shoppers Struggle, Small Firms Caught in the Squeeze

Food Prices Bite as Inflation Jumps — Pubs and Households Feel the Pain

Inflation is up to 3.4%. The analysis shows the rise in the rate at which prices are rising it down to tobacco, air fares and food prices mainly. Food inflation is at 4.5% and that matters a lot to UK households.

It also matters a lot to small businesses. Those in the hospitality sector running restaurants and pubs want to keep their food prices down, because their customers are struggling to afford to go out. Some go out less often, but many can no longer afford to go out at all. If businesses must put their food prices up because they can’t absorb the additional costs they’re caught in that doom loop of rising prices and fewer customers.

Costs for businesses though can go up much faster than for households, depending on the sector they’re in and where their materials come from. For many during the pandemic the cost of doing business went up by a quarter or even more, and for many of those the costs have stayed high. With added wage bills, energy bills, business rates and taxes small and micro businesses are struggling.

However. There are a few signals that things may be improving if only marginally.  The green shoots of new year optimism are beginning to peep through as some of the confidence measures are slightly less negative than at the end of last year. We have fewer rumours to contend with and the thought that there might be some stability ahead makes people more optimistic that they know what they’re dealing with. Even when it is tough out there small and micro business owners are by nature tough too, Stability means certainty which is the basis for confidence. With luck this slight rise in inflation won’t knock that sentiment off track.