Business owners in the West Country are growing increasingly concerned about the impact of inflation, with many saying they are being forced to hike prices as they battle with soaring costs.
An economic survey of some 400 firms by chamber of commerce Business West found nearly two-thirds are worried about rising costs - up from 63% in the first quarter of 2022 and the highest level recorded since the survey question was introduced in 2008.
The results come as the UK’s annual rate of inflation reached a 40-year-high in May.
Businesses are experiencing a surge in costs across the board, affecting their ability to plan for the future, Business West said. Labour costs and utilities, such as energy, are the top drivers of pressure on prices (64%), followed by transport fuel and raw materials (53%).
More than half of the businesses surveyed increased their prices over the last three months and 64% of manufacturers and 50% of service-based firms said they would do so in the next three.
Simon Hurley, managing director of Rothko and Frost, a decorative materials firm based at Mitcheldean in the Forest of Dean in Gloucestershire, said the cost of metal tins used for paint had doubled, while solvent costs were up 20% since the pandemic.
“Shipping has doubled. Staff standards of living have decreased due to inflation and stagnant wages,” he said.
“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.”
The cost-of-living crisis and the widespread lack of staff could also risk stifling the economic recovery of the South West’s hospitality and leisure sector.
Joe Cussens, managing director of The Bath Pub Company, said his firm’s energy costs had more than doubled, making electricity the company’s single largest overhead. He also said supplier prices had increased, with cooking oil 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,” he said.
Business owners’ confidence in their own firms remained higher than confidence in the UK economy, despite the myriad hurdles facing them, Business West said. But both measures were “substantially down” compared to the first quarter of 2022.
Confidence in the UK economy has fallen to the level seen in the depths of the Covid crisis. Only 13% of respondents report feeling confident or very confident, amid general fears of stagflation.
Matt Griffith, director of policy at Business West, said companies were now looking for “strong leadership” to help address the challenges.
“It is easy for local and national political leaders to take economic growth for granted. Now is not the time for complacency,” he 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."
Like this story? Why not sign up to get the latest South West business news straight to your inbox.
