Today’s announcement that the rate of inflation reached 3% has created concern amongst businesses about the rise ahead of a period when many may have to increase prices to cope with April’s uplift in Employer’s National Insurance Contributions.
Commenting on the rise and its impact, the Chamber's Policy Director, Chris Fletcher said: “There’s no doubt that the inflation figures make for grim reading. Prices were expected to rise but not at this rate. Our latest QES shows that concerns about inflation grew substantially in Q4 last year and today’s news will only increase businesses worries.
“Energy prices are expected to increase in April and for most businesses they will also be having to contend with a spike in employment costs when the new Employer NIC rates start coupled with increases to the National Living Wage and Minimum Wage. The NIC increase is substantial and is the cost increase that is causing most concern with businesses with many seeing price rises as one way of offsetting the extra money they will have to find every month. For some businesses this equates to tens of thousands of pounds a year. Anyone with a basic understanding of business and economics will realise this will be inflationary.
“With the government’s growth mantra ringing in our ears this is looking an increasingly impossible task as real world impacts of various policies start to take hold. The government should revisit its plans, announced last October, and start to phase in what is, in effect, a huge increase in tax on jobs, whilst there is still time. Businesses understand the need to boost government revenue to help with growth, but not at the risk of wreaking havoc with the economy."