Figures released today show the Consumer Price Index (CPI) reached 4.0% in December, up from November’s 3.9%, prompting reactions from various sectors.
Martin McTague, National Chair of the Federation of Small Businesses (FSB), expressed disappointment at the uptick in inflation, characterising it as an unwelcome start to 2024. Having faced challenges at the end of the previous year, businesses are now bracing for more difficulties. McTague highlighted the temporary relief for householders following the reduction of the consumer energy price cap in October. However, he noted that business tariffs remained unaffected, leaving many grappling with heightened utility bills. Proposing solutions, he suggests raising the Employment Allowance to counter rising labour costs, increasing the VAT threshold to £100,000 to enhance business potential, and implementing tax-free shopping to attract international visitors. Additionally, he cautions the Bank of England against maintaining interest rates too high for too long, as this could exacerbate the burden of business debt on small enterprises.
Neil Rudge, Head of Enterprise at Shawbrook, acknowledges the frustration conveyed by the latest Office for National Statistics (ONS) figures, citing a global trend of increasing inflation observed in developed economies like the US and France. Despite the challenges presented by the current inflationary environment, Rudge points to positive indicators such as falling food inflation, reductions in wage growth, and robust GDP figures. He emphasises the importance of business leaders hoping for rate cuts and expresses concern about potential rate hikes in the coming months. Importantly, he highlights the impact of disruptions in the Red Sea on shipping prices, which would affect importers.
Greg Marsh, CEO and co-founder at Nous, a money-saving expert, added his insights, labeling today’s inflation figures as troubling for businesses. He draws attention to core inflation remaining unchanged, adding pressure to maintain high interest rates. Marsh warns businesses about potential mid-contract price hikes by mobile and broadband providers, impacting both business contracts and employees’ lives. Marsh’s analysis suggests that households could be over £450 worse off due to these price hikes over the last two years. Acknowledging the relentless changes in bills amid economic turmoil, Marsh urges responsible employers to invest in their team’s financial well-being, introducing support to enhance their financial situation and maintain an engaged and loyal workforce.
In conclusion, the escalating inflationary pressures, exemplified by the rise in the Consumer Price Index (CPI) to 4.0% from November’s 3.9%, have set the stage for widespread concern across various sectors. The collective sentiment remains one of vigilance and adaptability in the face of dynamic economic challenges.