Business West’s latest quarterly economic survey has found that business concern about inflation, which worried almost two thirds of respondents, is at the highest level ever recorded since this question was introduced to businesses in 2008.
This is up from 63 per cent in the first quarter of 2022.
Nearly 400 businesses from across the South West took part in the survey. The results come as the UK’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 per cent, followed by transport fuel and raw materials both at 53 per cent.
Over half of businesses surveyed have increased their prices over the last three months and 64 per cent of manufacturers surveyed are planning to increase their prices in the next three months, as is half of service-based businesses.
Wendy Riley, Company Secretary at PAR Foods, a food export services company based in Calne, said, “Our shipping costs have ballooned – a container cost £8,000 in February, now its £15,000. We feel helpless as we have to pass on these costs.”
Peter Martindale, Director of Peter Martindale Conservation based in Salisbury, added, “Prices for hiring of contractors, materials, utilities, and fuel are all increasing. If I wish my earnings to keep level with costs, I will have to put up my charges.”
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 per cent of respondents report feeling confident or very confident, amidst general fears of stagflation.
Matt Griffith, Director of Policy at Business West, commented, “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, 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 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.”
Pictured above: Matt Griffith, Director of Policy at Business West