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Inflation hits double figures as cost of doing business continues to rise

The cost of doing business is continuing to rocket as UK inflation hit double figures for the first time since 1982, soaring to 10.1% in the 12 months to July, up from 9.4% in June, according to the Office for National Statistics (ONS).

The Bank of England has predicted inflation could peak at more than 13% this year as food, energy and fuel costs continue to rise.

Alex Veitch, Director of Policy and Public Affairs at the British Chambers of Commerce, said: “The rise in Consumer Prices Index inflation to 10.1% is the tenth monthly increase in a row and another record high.

“This higher than expected inflation increase, alongside eye-watering energy prices, this confirms the severity of the cost of doing business crisis.  

“This squeeze on businesses’ operating costs is also reflected in the latest Producer Price Inflation figures which show a 22.6% rise in the year to July 2022, which remains among the highest levels since records began in 1985.

“The difference between input and output inflation illustrates that many firms are absorbing as much of these additional costs as they can. There is a limit to how much additional cost firms can absorb and is limiting growth and investment.

“Our research shows that two out of three firms expect to raise their own prices in the coming months, with utilities, labour costs, and raw materials all cited as the main drivers of costs. Firms have been telling us about this inflation shock for 18 months now.

“Businesses want to support their people, they want to invest and grow and they don’t want to put prices up for their customers, but they are left with little choice.

“The Government should act and has levers to pull to give vital support to businesses now.

“The two immediate and impactful choices would be to review and reform the Shortage Occupations List to help fill the 1.3 million job vacancies; and bring businesses’ energy costs down by lowering the VAT rate from 20% to 5%. 

“It’s time for action and we’re offering solutions. It’s time for Government to listen.”

More information on the ONS inflation data can be found here.

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