Hospitality hits back at Bank of England suggestion businesses shouldn't raise prices

By James McAllister

- Last updated on GMT

UKHospitality hits back at Bank of England suggestion businesses shouldn't raise prices

Related tags Inflation Government ukhospitality

UKHospitality has hit out at the suggestion from Bank of England Governor Andrew Bailey that businesses should not raise prices above the rate of inflation.

The trade body notes that hospitality businesses are already facing unprecedented cost pressures far above the current 10% inflation rate, with energy bills double what they were last year and food price input inflation of over 20%. 

It adds that businesses face 'another catastrophic hit' this week when energy support is significantly reduced, which hospitality businesses expect to cause an 82% rise in bills.

UKHospitality's comments come after Bailey called on businesses to hold back price rises, telling them that interest rates will continue to rise unless inflation falls.

Last week it was reported by the Office for National Statistics that the rate of inflation jumped unexpectedly in February​, driven primarily by rising alcohol prices in pubs and restaurants following discounting in January.

Kate Nicholls, chief executive of UKHospitality, says that firms have no choice but to reluctantly raise prices in order to stay in business and save jobs.

“We fully support the objective of reducing inflation – it is in all of our interests,” she says. 

“However, hospitality businesses are under immense pressure from ever-rising bills, particularly energy, and we have already seen thousands of good businesses go bust as a result.

“Interest rate rises are compounding the sector’s problems by increasing debt repayment costs for businesses and squeezing our customers’ disposable income.

“To suggest that the sector should stomach these staggering cost increases ignores the real and stark situation facing venues across the country. It is simply impossible if we want to have a viable hospitality sector left in a year’s time.

“No business wants to raise its prices, for fear of losing sales. We all want prices to be as low as possible for consumers, and it is a minor miracle that many have held off increases for as long as they have.

“The reality is that without adequate Government support, whether it is through energy, business rates or VAT, doing as the Governor asks will just mean business failure and job losses, compounding the country’s economic woes.”

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