London, UK: Inflation has eased slightly to 10.1% from 10.5% the previous month as fuel price rises slowed. Decreased transport costs were one of the main drivers of the lower inflation rate, along with restaurants and hotels, as prices dropped in cafés and restaurants from the December Christmas period to January.
Grant Fitzner, chief economist, Office for National Statistics, said the latest figures showed there were signs costs facing businesses were “rising more slowly”, but warned “business prices remain high overall, particularly for steel and food products”.
Chancellor Jeremy Hunt also warned the “fight is far from over” on rising prices.
The reduction in inflation is bigger than economists polled by Reuters had expected but is in line with a forecast by the Bank of England’s forecast ealier this month.
Kevin Pratt, personal finance expert, Forbes Advisor, said that inflation, at over 10% now for the fifth month on the trot, “remains a huge problem for companies across the economy”.
“Businesses are consumers too, of all manner of products and services, so they’re ensnared by the cost of living crisis in the same way as their customers. And they remained faced with the stark and unhappy choice of either passing on the higher prices they are paying, or absorbing increased costs by making smaller profits. Neither option is sustainable,” he said.
“Much of the financial pain currently being felt by UK businesses of all sizes comes in the form of higher energy bills. Whether they run an enterprise from home or have separate premises, the cost of powering the operation has become a massive part of their overheads.
“And with government support for business energy bills reducing considerably in April, many firms will be worried about their medium-term viability.
“We can only hope inflation continues its recent downward trajectory, and that this is coupled with a steep and sustained decline in wholesale energy prices as the year progresses. Analysts suggest we may see significant falls in the spring and summer, but if we don’t, the government may need to rethink its business support programme to avert a catastrophe for UK businesses.”
