Commenting on the latest figures showing the UK’s Consumer Prices Index measure of inflation rose to 5.4% in the year leading to December 2021 – the highest level since March 1992 – East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) chief executive Scott Knowles said: “It feels like we are dangerously close to a very real cost of doing business crisis that, if it continues unabated, could have a profoundly negative impact on the region’s economic recovery.
“Spiralling energy costs are a particular worry for businesses. In the East Midlands, we have a high proportion of energy-intensive firms in industries such as manufacturing and engineering, so every price hike squeezes their margins.
“This ultimately affects their ability to create jobs and wealth locally, as well as increase wages for their employees, who will bear the brunt of rising inflation at home. Remember, these individuals are also the customers of other businesses and local services, so their diminished spending capacity has a huge knock-on impact.
“Our most recent Quarterly Economic Survey illustrates the anxiety many of our region’s businesses are feeling, with the proportion of those concerned about price rises – in everything from raw materials to staffing – growing from 46% to 62% between the third and fourth quarters of last year.
“Some of these are global pressures – the rebound from the 2020 slowdown is putting pressure on material supply from China to the US – and out of our own control, but others are of our own making.
“The looming national insurance hike, forthcoming energy price cap increase and reversal of VAT reductions for hospitality means this problem isn’t going away, with the British Chambers of Commerce forecasting inflation to push well above 6% by April – putting businesses under mounting pressure to continue raising prices.
“It is crucial the Government’s Supply Chain Advisory Group and Industry Taskforce provides real-world solutions to the supply and labour shortages that continue to drive the upward pressure on consumer prices, while Westminster must be minded to ensure it doesn’t place any additional costs on businesses and individuals for the remainder of this Parliament.”