Majority of UK firms report rising prices as supply chain pressures intensify

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The survey of over 1000 businesses carried out in October found the overwhelming majority of firms are raising prices as they face acute shortages and cost pressures. When asked if they had seen a change in the price of their goods or services in the past year 46 percent reported significant increases and 34 percent reported slight increases. One retailer in Kent said: “We have pushed an immediate 8 percent price increase through but feedback from retail is that this is the median of increases expected from all suppliers who import into the UK due to very high shipping costs.” According to the British Retail Consortium, three in five retailers are expected to increase their prices in the next three months whilst one in ten have already raised prices.

Shipping costs have taken a major toll on businesses with one sole trader in Doncaster commenting they’d seen container costs increase 500 to 600 percent.

Other pressures cited include fuel and energy costs whilst half of the businesses surveyed reported skills shortages either themselves or with others in their supply chain.

Particularly bad shortages were reported for HGV drivers, warehouse staff and engineers.

The Commercial Director of a South West food and drink manufacturer said: “These issues have caused us to have to rest, cap and even delist lines that we sell to the nations supermarkets, decline a large amount of sales and absorb write off costs.

“We have always prided ourselves on being a brilliant supplier to our customers, but these trying times are testing relationships that have been built on years’ worth of high-quality products and excellent service.”

Price increases were particularly marked for manufacturers with 92 percent saying they had seen an increase in the cost of goods and services.

A manufacturer in the Wirral said: “The price of steel has nearly doubled in price in the past twelve months putting pressure on cashflow [which] could possibly restrict growth of our company.”

Another manufacturer in East Lancashire added: “‘Cost of raw materials from overseas have increased by 25% since the beginning of year.

“Shipping container delays and costs also a big worry currently.”

Director-General of the BCC Shevaun Haviland said: “Firms are facing huge pressures as they battle to keep on track for Christmas and provide the goods and services the UK needs, but we have yet to see any concrete steps to address these issues.

“Unless action is taken soon, firms could be forced to cut back on their capacity or limit the range of products they offer.”

Earlier this week head of industry body UK Hospitality Kate Nicholls warned many of their members were planning at least three price increases before April.

Speaking to MPs on the Environment, Food and Rural Affairs Committee she explained the squeeze on businesses in the run-up to Christmas would likely pass through to consumers in the new year in the form of higher prices.

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In the same meeting, Deputy Governor of the Bank of England Dr Ben Broadbent predicted food prices would rise around 5 percent next year.

Reporting their results this week Associated British Foods confirmed where necessary they would “implement price increases”.

The group has already increased prices on popular brands such as Kingsmill, Twinnings and Ryvita.

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