Crisis for SMEs as inflation hits 10.1%

Kevin Brown, savings specialist at Scottish Friendly

UK CPI inflation rose 10.1% year-on-year in September (consensus: 10%) compared to 9.9% in August. The monthly increase in CPI was 0.5% (consensus: +0.4%) compared to 0.5% increase in August. Rising food prices made the largest upward contribution to the change in the CPI annual inflation rate between August and September 2022.

Alan Thomas, UK CEO at Simply Business, has commented: “The latest CPI figures highlight the impact that the current economic situation is having on small businesses in the UK. Record high inflation, soaring energy prices, and political instability are having a detrimental impact on the nation’s SMEs. Simultaneously, with consumer purchasing power down as Brits cut back on non-essential spending, small firms will continue to feel the impact in the months ahead.

“Many small businesses are at breaking point. Our latest SME Insights Report showed that the increase in fuel and energy prices are putting over half of UK small businesses at risk of collapse, with rising costs representing the single greatest threat to SME survival. We recently had a customer tell us that their energy costs will increase by 320 per cent – this is completely unsustainable.

“Accounting for over 99% of all businesses and contributing trillions of pounds towards the economy, the government has to acknowledge the vital role small businesses will play in our collective recovery.  And while it’s encouraging to see that 71% remain confident about their long-term prospects, ultimately, for our economy to bounce back as quickly as possible, we need to support our small businesses to do the same.”

Kevin Brown savings specialist at Scottish Friendly, commented:

“The latest inflation data from the ONS are eye-watering but unsurprising. This data set has a more influential role in the economy as well because pensions and benefits are routinely uprated in the new tax year by the September measure. However due to worsening economic difficulties, this now seems up for debate.

“The UK is seemingly facing an everything crisis, all driven by inflation. GDP is falling, interest rates are rising, wages are not keeping pace with inflation, tax rises are back on the table, benefit uprating is up for debate and uncertainty over energy bills is back. Households are being pummelled from every angle as we enter the most difficult period of the year, Winter. It’s going to get worse before it gets better.

“So, what can households do with such a complicated outlook? It may seem tough, if not impossible for many, however continuing to build up financial resiliency wherever possible could be the best way to limit the damage of any future shocks further down the tracks.”

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