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17 Aug 2022

Businesses being forced to raise their prices as inflation reaches double digits, says East Midlands Chamber

Commenting on the latest figures by the Office for National Statistics showing Consumer Prices Index inflation rose to 10.1% in the year to July 2022, East Midlands Chamber chief executive Scott Knowles said: “Reaching double-digit inflation, after 10 consecutive monthly increases, really hammers home the pain afflicting our firms as the cost of doing business crisis shows no sign of easing.

“The squeeze on their operating costs is reflected in the latest Producer Price Inflation figures, which show a 22.6% rise in the year to July 2022 – among the highest levels since records began in 1985.

“The difference between input and output inflation illustrates that many firms are absorbing as much of these additional costs as they can.

“But there is a limit to how much additional costs they can absorb, and is limiting growth and investment. In our latest Quarterly Economic Survey, there was a 6% drop in investment intentions for plant and machinery among East Midlands companies, and a 3% decline in investment intentions for training people.

“As utilities, labour and raw materials costs continue to drive upwards, 62% of our region’s businesses expect they will be forced to raise their own prices in the coming months.

“Businesses want to support their people, they want to invest and grow, and they don’t want to put prices up for their customers, but some will be left with little choice.

“The Government must act and has levers to pull to give vital support to businesses now. The two immediate and impactful choices would be to review and reform the Shortage Occupations List to help fill the 1.3 million job vacancies, and bring businesses’ energy costs down by lowering the VAT rate from 20% to 5%.”