Loveone, an Ipswich gift shop, receives notifications daily, announcing price increases of 5% to 10% on the items it sells, often adding a few pounds to the sticker price.
“If I don’t get my orders by a certain date, I’ll have to pay more,” says Cathy Frost, who has run the shop for 15 years. “Since I ordered stock six months ago, I can keep my prices for now, but if the things I order now are going to be more expensive, I’m like, ‘Will people pay more?’ I ask.”
Frost is already worried about Christmas. Retailers can have six-month lead times to ensure they have the right products for their most important season. “I wonder, if this livelihood crisis is really to be felt in October, will people spend on Christmas?” says. “I don’t know if people will spend £30 on a candle last Christmas.”
Foot traffic has decreased in Ipswich, which Frost blames on people with less money to spend, as well as the number of people working from home. Small businesses are not protected by an energy price cap and may therefore be exposed. Frost turned off the heating weeks ago to cut the bills. Meanwhile, part-time personnel costs have also increased and the result has been shunned.
“I’ve been here for 15 years and I’ve been through Covid but it felt like a bit of a walk in the park by comparison,” says Frost. “We knew we were at the door and we were going out.”
‘You can hit as much as you can’
Ben Hancock is managing director of Oscar Acoustics in Kent, which manufactures and installs acoustic soundproofing for interiors. Inflation presents a number of challenges as the £4.5m turnover company plans an expansion by adding an annex.
While Hancock says some companies may not have worse financial positions, he will continue with the investment. But inflation is hitting the raw materials the company uses, such as aluminum for fittings, which can change the price overnight. The weakening sterling didn’t help either, making imports from the US more expensive and forcing the company to choose between raising prices or lowering margins.
“You need to protect your customers as much as possible,” he says. “You get as much profit margins as you can and then you make the increase.”
The company is also seeing increased wage demands as it seeks new hires. Hancock is looking for ways to make the business attractive without offering wage increases, which he fears may be unsustainable if the economy worsens. “We have to be a little careful if we’re going into a recession,” he says.
‘The risk is high’
David Exwood owns approximately 600 cows and farms on approximately 2,000 acres in Horsham, West Sussex, that grow crops such as wheat, oats, oilseed rapeseed, corn and beans. He is also vice president of the National Farmers Association.
“No one is isolated from what’s going on, that’s for sure,” he says. “My fuel bill has doubled, my fertilizer bill has tripled, and those are big numbers, it’s an extra £250,000 for me to keep farming the same.”
Everything from spare parts to fences and fence posts has gone up in price. “There isn’t much you can do about it,” he says. “Yes, you can do efficiency, but you can’t find it at that scale. It puts a strain on businesses. You can only go on for so long, eventually something has to give. You either have to do less, or you have to have less ambition, or you have to grow less, because you can’t work miracles forever.”
Exwood says that while the price of his wheat has risen, the crop he feeds to his cattle has risen “much more than that.”
Customers in the farm shop are counting their pennies. “People are very nervous. They can buy less or have chicken thighs instead of breasts; they can have grilled steak instead of beef tenderloin.”
He adds: “Agricultural risk has skyrocketed. The volatility is beyond anything we’ve experienced. I can’t budget, I have no idea how to predict what the market will do. Farming is a long-term game. I just bought a bull, I’m gonna put that bull [to mate] and these calves won’t be ready for sale until 2025, three years from now. Who knows what the price of beef will be in 2025? That’s everyone’s guess.”
‘I must be very understanding’
When filling a 400-liter fuel tank on a 44-ton truck, it is necessary to pay attention to the cost of diesel. Kevin Plews, director of Plews Brothers, a North Shropshire-based shipping company, says there’s not much they can do about price increases. “It has been on the rise since Christmas,” he says. “I should be pretty knowledgeable about how we buy.”
While fuel cards can sometimes be more cost-effective, it may be better to buy in bulk if prices drop. Drivers’ wages have also risen, in part because of the scarcity (down to the immigration limits post-Brexit, as many analysts suggest) and inflation in their home country. Other rising costs include tires and urea-based AdBlue added to diesel combustion to reduce harmful pollutants.
At least for now, interest rates are historically low. “I remember the ’70s and ’80s when inflation was very high, but there was an added aggravation of high interest rates,” Plews says. “It’s a worrying thing if interest rates go up.”