With the announcement that inflation has risen to 9% what will that mean for small business owners?
The Office for National Statistics (ONS) has released the latest inflation figures, announcing that the figure has risen by 9 per cent in the 12 months to April 2022. This is the sharpest jump since 1982. The rising costs of gas, electricity and fuel is a huge contributing factor.
With prices rising for not just the end consumer but businesses too it can be a worrying time for all. The Federation for Small Businesses said that operating costs had risen for almost 9 in 10 businesses compared with last year. With wage increases, fuel costs and demand and supply issues for raw goods it will be a strain, especially after the pandemic.
Small businesses are being particularly hard hit with many operating on similar utility contracts as consumers and lack of resources compared to larger companies.
Businesses are being urged to audit prices – could a price increase lead to better profit margins? But as consumers are used to current prices would this increase put the consumer off spending?
Take a look at expenditure – can any costs be reduced? Look at transportation, raw materials and over production costs.
Forecast – look at your business plan, plan ahead for future rises in costs and look at your budget.
The Bank of England believes that inflation will hit 10% this year, falling next year. This is due to the war in Ukraine and lockdowns in China making imports to the UK difficult.