Business West’s latest quarterly economic survey has found that business concern about inflation, which worried over two thirds of respondents (69%), is at the highest level ever recorded since this question was introduced to businesses in 2008.
This is up from 63% in the first quarter of 2022.
Nearly 400 businesses from across the South West took part in the survey. The results come as the U.K.'s annual rate of inflation reached a forty-year-high in May.
The survey found that businesses are experiencing a surge in costs across the board, affecting their ability to plan for the future. Labour costs and utilities, such as energy, are the top drivers of pressure on prices both at 64%, followed by transport fuel and raw materials both at 53%.
Over half of businesses surveyed have increased their prices over the last three months and 64% of manufacturers surveyed are planning to increase their prices in the next three months, as are half of service-based businesses.
Simon Hurley, Managing Director of Rothko and Frost, specialists in decorative materials, based at Mitcheldean in the Forest of Dean in Gloucestershire, said:
“Metal tins we use for paint have doubled. Solvent costs are up 20% since the pandemic. Shipping has doubled. Staff standards of living have decreased due to inflation and stagnant wages.
“Banks aren’t lending, and customers are spending less. Our annual sales are about half a million down as a direct consequence of Brexit, on top of everything else we’ve had to cope with.”
Joe Cussens, Managing Director of The Bath Pub Company, said:
“Our energy costs have more than doubled, making electricity the single largest overhead. Supplier prices for food have increased across the board. For example, cooking oil has gone up 75%, fish by 50%, and beef by 60%.
“I'm more worried now about my business and the economic outlook than any time over the last 16 years.”
Andy Fraser, owner of Bristol Community Magazines said:
“Any significant further input cost increases, which cannot be passed on in the current economic climate, will directly impact the ongoing viability of part of my business.”
Respondents’ confidence in their own businesses remains higher than confidence in the UK economy, despite the myriad of hurdles facing them. However, both measures are substantially down compared to Q1 2022, and the gap is wider than ever as confidence in the UK economy has fallen to the level seen in the depths of the COVID-19 crisis. Only 13% of respondents report feeling confident or very confident, amidst general fears of stagflation.
Matt Griffith, Director of Policy at Business West said:
"Businesses in the region are facing unprecedented price pressures from all sides. Margins are being squeezed by ever increasing costs of labour, materials, energy, and fuel which have intensified since the outbreak of war in Ukraine, all against a backdrop of widespread global inflationary pressures in trade costs and commodities.
“Businesses are having to deal with uncertainty like never before, from a vulnerable starting position and with little support from the Government who have focused their efforts on households instead.
“It is easy for local and national political leaders to take economic growth for granted. Now is not the time for complacency and businesses are looking for strong leadership to help address their challenges.”
You can find a link to the full report, here.