Business & Investment

Restaurants, hotels and MPs facing “horrible” 18% inflation said

Restaurants and hotels are tackling as much as 18% of “horrible” inflation, and bosses warn that supply chain disruptions and labor shortages are causing havoc in the hospitality sector.

Ian Wright, CEO of the Food and Beverage Federation, an industry group, told members of the Business, Energy and Industrial Strategy Committee that this rate is a bad sign for the retail industry.

“In the hospitality industry, which is a pioneer in retail, inflation is currently moving between 14% and 18%, which is horrifying,” he said.

“Inflation is a bigger tragedy than most others because it discriminates against the poor.”

Wright warned that the food and beverage sector expects the current challenges to continue for several years.

“Six months ago, I thought almost every business was temporary. Now every business I know expects this to continue from 2023 to 2024.

In hearing about the impact of a supply chain crisis on consumers and businesses, Wright recalled high inflation when supermarket employees changed prices twice within an hour in the late 1970s. “We really can’t go back to it. It took us 15 years to recover,” Wright said.

Food and beverage producers have been squeezed by a combination of rising raw material prices, rising wages, rising transportation costs amid a shortage of HGV drivers, and rising energy prices.

Inflation in the UK reached 3.2% in August, up from 2% in July, according to the Consumer Price Index’s inflation index and Office for National Statistics (ONS) figures.

Inflation has been at its highest level in the UK since March 2012 and is expected to rise further, in addition to consumer pressure just before the government raises taxes.

Soaring gas and electricity prices also affect households. The Bank of England expects inflation to exceed 4% this winter.It is well above the 2% target, raising expectations that interest rates will be forced to rise.

According to Stephen Phipson, CEO of industry group MakeUK, manufacturers are facing rising raw material prices by 30% to 40%, which is important for certain companies if these costs cannot be passed on. There is a possibility of becoming.

“As far as we’re seeing, they’re not telling everything, it can only last for a few months. Six months is my best before any real business failure is seen. It’s a guess, “said Fipson.

Companies, like many other sectors of the economy, suffer from the lack of availability of truck drivers, Fipson said.

However, recent government moves to relieve labor pressures in the logistics industry – allowing foreign drivers to apply for temporary visas, also known as “cabotage”, in the UK for foreign-registered trucks. Allows relaxation of allowed deliveries – the situation has not yet improved, according to the Road Haulage Association (RHA), an industry group.

“Reports have not been relaxed at all,” said Duncan Buchanan, RHA’s head of policy. “Several measures have been taken, such as enhanced training and enhanced testing, but they are not very visually effective.”

Logistics companies also have to pay higher wages to seduce new staff or retain the staff they have, with some companies increasing labor costs by up to 20%. Has been reported.

“We see a lot of driver poaching. Large companies with deeper pockets have a higher rate of workforce,” said Buchanan.

Trade unions and industry groups have expressed dissatisfaction with the government’s relaxation of cabotage rules, and RHA hopes the change will “suppress the wage increases offered.”

“Our belief is that wage level readjustments, which are generally welcomed in attracting more drivers, are likely to be curtailed by cabotage behavior,” said Buchanan.

The UK has lost 53,000 HGV drivers in the last four years, according to new figures released by ONS. This shows that the number of people who play these roles has decreased by 16% from the 2016-17 peak.

Most of the losses, including a net loss of 42,000 British and 12,000 EU citizens, occurred during the pandemic.

Restaurants, hotels and MPs facing “horrible” 18% inflation said Restaurants, hotels and MPs facing “horrible” 18% inflation said

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