UKHospitality hits back at Bank of England plea for businesses not to increase prices
UKHospitality has hit back at the Bank of England governor's call for businesses not to increase prices, which the trade body claims is "simply impossible if we want to have a viable hospitality sector left in a year's time".
Bank of England (BoE) governor, Andrew Bailey, has urged businesses not to rise prices, warning that if inflation does not fall, interest rates will rise again.
Speaking to BBC Radio 4's Today programme after the BoE raised interest rates from 4% to 4.25%, Bailey said: "I would say to people who are setting prices: please understand if we get inflation embedded interest rates will have to go up further.
"When companies set prices I understand that they have to reflect the costs that they face. But what I would say, please, is that when we are setting prices in the economy and people are looking forwards we do expect inflation to come down sharply this year and I would just say please bear that in mind."
UKHospitality chief executive Kate Nicholls said operators in the sector had no choice but to raise prices in the face of energy, food and drink cost increases far in excess of the current 10% inflation rate.
Nicholls said: "We fully support the objective of reducing inflation – it is in all of our interests. 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."
Businesses are facing food input inflation in excess of 20% and an 82% increase in energy bills when government support is reduced next week.