It’s been well-reported that inflation is rising, and people are beginning to see price increases hitting their pockets.
Thanks largely to rising prices in energy, along with a very buoyant second-hand car market and the increasing cost of eating out, inflation has risen at its fastest pace in almost 10 years, hitting 4.2% in the year to October.
So what will this increase, reported by the Office for National Statistics, mean for businesses which have largely been enjoying stable prices?
The Bank of England has already said it may need to raise interest rates, which will affect the cost of borrowing.
Rapid price rises can make consumers more cautious, particularly over discretionary or impulse purchases, so if you are planning a price rise then gradual increases may be preferable to a sudden hike, to avoid deterring too many customers.
Inflation also impacts businesses’ costs, such as stock, suppliers and utilities (and we have mentioned the energy prices rises). Now would be a good time to review stock levels and suppliers to ensure you are able to remain profitable.
Our advice is always to plan ahead, and planning now will help your business weather a storm of inflation and any interest rate increases.
In November, Bank of England governor Andrew Bailey apologised for the rising prices and warned inflation could climb as high as 5%, before falling back again. So now, more than ever, businesses need to look at ways to weather any storm ahead.
For help and advice on business and tax planning, please get in touch with the team at Optimum. We work with business owners across Swindon, Cheltenham, Wiltshire, Gloucestershire and the surrounding area.