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19th April 2023

Prices still rising in the short term as inflation remains above 10%

Data released by the ONS today (19 March) reveals that inflation dropped slightly to 10.1% in March.

Oliver Carpenter, Policy Manager at Chambers Wales South East, South West and Mid, said:

“The latest ONS data recording inflation at 10.1% indicates that although the figures are heading in the right direction, inflation has not fallen as much as expected.

“Inflation was listed as one of the most important factors contributing to rising business costs in our Quarterly Economic Survey for Q1 2023, with almost two thirds (64%) of Welsh businesses stating that inflation was more of a concern today than three months ago.

“Energy prices, labour costs, fuel and raw materials are all also adding to the immense strain that businesses are currently under. Many businesses are closing part-time, operating month to month and hand to mouth. Businesses need to see a reduction in their costs.

“As energy prices continue to decrease, businesses should see some relief over the summer months, but it is important that firms see and feel the result of wholesale reductions. With energy support being decreased at the start of April, many businesses are under heavy pressure.

“37.5% of businesses have reported that their cashflow has worsened over the past 3 months, while 60% expect to increase their prices in the next quarter.

“It is vital that efforts are made to bring inflation down to a more manageable rate and that businesses receive both adequate support and relief from policymakers to strengthen the Welsh economy.”

David Bharier, Head of Research at the British Chambers of Commerce, said:

Today’s CPI rate of 10.1% means that prices continue to rise at an alarming rate. Driven largely by housing and food costs, this is on top of an already high growth rate from this time last year.

More positively, today’s figures show that the Producer Price Index has eased to 7.6% from 12.8%indicating the peak may have passed for input price growth.

“Our research shows that inflation is still by far and away the top concern for UK SMEs. This has been driven by three years of global lockdowns, supply chain crises, energy shocks, and new trade barriers with the EU.

“Small businesses, particularly those in the retail and hospitality sector, have been the least able to absorb cost rises, and we see that most have not invested or grown.

“Businesses need to see a reduction in the cost and burden of exporting and importing, particularly with the EU, as well as increased support to deal with the unprecedented energy price shock.

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