The government is being urged to act swiftly as the rate of inflation in the UK saw a sharper increase than anticipated at the start of the year, placing added financial strain on consumers and businesses alike.
This unexpected rise could also delay potential interest rate cuts, which many had hoped would provide economic relief.
According to the latest figures from the Office for National Statistics (ONS), the Consumer Prices Index (CPI) reached 3% in January, climbing from 2.5% in December. Economists had forecasted a more modest increase to 2.8%, highlighting the surprise nature of the inflationary jump.
Key factors driving this rise included higher costs for essential food items such as meat, bread, and cereals, which have contributed to increased grocery bills. Additionally, the hospitality sector may feel the knock-on effects of rising education costs, as private school fees surged following the removal of VAT exemptions.
Travel expenses also played a role in the inflation hike. While airline fares typically drop in January, this year’s decrease was smaller than usual. Coupled with rising fuel prices, transport inflation hit its highest level in nearly a year.
Delaying regressive changes to the employer NICs threshold due in April would prevent further price increases and deliver economic growth, says UKHospitality.
Commenting on today’s inflation figures, Kate Nicholls, Chief Executive of UKHospitality, said: “This a worrying jump in inflation and should act as a stark warning of what is to come if the Government persists with its plan to inflict £3.4 billion of cost on hospitality businesses in April.
“Venues are already being forced to put up prices in preparation for the increases and will undoubtedly continue to do so, as businesses have reached the limit of what they can absorb.
“Avoiding this is simple – delay the regressive changes to the employer NICs threshold, thereby allowing hospitality businesses to continue on a path of growth.
“As top contributors to economic growth in November and December, it’s clear hospitality is a solution to help the Government grow its way out of potential stagflation.”