Energy inflation steering ever higher business costs
As food price inflation in hospitality increases again to almost 22%, UKHospitality is calling for measures that enable businesses to exit energy contracts fixed at the peak of the energy crisis.
With a recent member survey conducted by CGA Insight showing that energy costs are up 80% year-on-year, and almost half of businesses that signed a contract at the peak of the energy crisis fearing that their business is at risk of failure, energy remains a key driver of inflation.
As the operating costs continue to soar, hospitality businesses will have no choice but to pass these increases on to the consumer, which will, unfortunately, drive inflation.
UKHospitality chief executive Kate Nicholls says that if the government is to achieve its aim of slashing inflation in half, it must fast address the ever-growing costs of doing business.
Energy costs are impacting farmers, food producers and manufacturers, as well as hospitality, with Nicholls warning that the sector will soon be "entrenched in inflation" if companies remain unable to get out of energy contracts that were fixed far above the current market rate.
She adds: "It’s my hope that the chancellor raised this urgent need for action with Ofgem [yesterday] (28 June), as he met with regulators, as there has been little in the form of action so far.
"While its review into the non-domestic energy market is positive, it has been ongoing for at least six months with no conclusions. The severity of the situation facing hospitality businesses requires far more urgency from the regulator and this inaction has resulted in business failure, which we have continuously warned of.
"If Ofgem is unable to act and intervene in the energy market, compelling suppliers to renegotiate with customers, then I would urge the government and the CMA to step in, properly investigate the market and do right by hard-working businesses by taking meaningful action."