Action needed to cool down firms sweltering amid soaring inflation

Just after the UK for the first time saw the mercury soar above the 40C level, inflation is also on the up again, hitting a new 40-year high in June to reach 9.4 per cent.

The rise – ahead of an expected jump to 11 per cent later this year, and the Bank of England saying it doesn’t expect the rate to return to its 2 per cent target until mid-2024 – turns up the heat on businesses already trying to survive amid the also-intensifying cost-of-living crisis.

Lisa Hooker of PwC says consumers reining in discretionary spend is already making its presence felt on balance sheets in the form of retailer profit warnings.

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Additionally, Simply Business, which provides insurance for small firms, says SMEs are putting survival tactics in place, finding half said that over the next six months they will be forced to increase their prices – something I’ve very much witnessed myself. A sandwich from my local deli is now over the £5 mark, meaning it will become a rarer treat.

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Scottish insolvency expert Blair Nimmo said inflation is proving “a particular challenge, as organisations tread that fine line of how much they can pass rising input costs on to customers, while wrestling with the conundrum of balancing pay rises against double-digit inflation”.

Many commentators are calling for action, such as Ed Rimmer, chief executive of SME finance provider Time Finance. He said: “When inflation hit 9.1 per cent, one in ten businesses we spoke to told us that they were unable to meet their financial commitments and a further one in five were struggling to remain competitive without rising their own costs.

“These were alarming statistics at the time, and it's unsettling to consider how this will deteriorate if the [UK] Government doesn't intervene soon and provide businesses breathing room to regain financial control.”

Many bosses are grappling with the prospect of rising prices (file image). Picture: Getty Images/iStockphoto.

He fears some firms will not survive, an all-too painful and real concern for the eponymous owner of Monique Oliver Art & Design, who said: "For the past two years, I've been hanging onto my business by my fingernails. This will be my last year in my own business unless things turn a corner soon."

It’s time to listen to the chorus of concerns – and provide something that is music to the ears of the business community.



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