Key facts
- UK inflation reached 3.3% in the 12 months to March, up from 3% in February.
- Higher fuel prices, airfares, and food costs are driving inflation.
- Consumer spending on services is now a key inflationary factor.
- The hospitality sector warns it cannot absorb further cost pressures and expects to pass them on to consumers.
- Industry bodies are urging the government to reduce taxes and duties to mitigate rising business costs.
Inflation in the United Kingdom has risen to 3.3% in the year to March, driven by increased costs for fuel, airfares, and food. This shift from goods to services as the primary source of inflation is empowering service companies, including those in the hospitality sector, to raise prices. Britons' continued spending on dining out and entertainment is contributing to this trend, creating a challenge for the Bank of England's efforts to control inflation.
The hospitality industry is particularly exposed, with trade bodies warning that businesses have reached a point where they can no longer absorb rising costs. UKHospitality chair Kate Nicholls highlighted that the sector is heavily taxed and cannot be expected to bear the brunt of increased expenses throughout the supply chain, which will inevitably lead to higher prices for consumers. She urged the government to consider measures to reduce the cost of doing business for such economically sensitive sectors.
Similarly, the British Beer & Pub Association is calling for a reduction in beer duty and permanent business rates reform to keep the price of a pint affordable. The association's chief executive, Emma McClarkin, emphasized the significant business costs faced by pubs and brewers amid economic volatility and uncertainty. With ongoing geopolitical instability in the Middle East expected to impact energy prices and food inflation projected to rise, the BBPA stressed the imperative for government action to mitigate these pressures.