Increasing fuel prices and energy bills contributed significantly towards pushing the UK’s annual rate of inflation to 7 per cent in March.
That figure represents a 30-year high, with experts expecting to see prices continuing to rise throughout April.
Such high levels of inflation will inevitably put pressure on the finances of businesses across industries, as well as on consumers who are seeing their spending power consistently eroded.
The latest data from the British Retail Consortium (BRC), suggests the squeeze on household finances is having an impact on consumer confidence and dragging down sales growth across the retail sector.
Rising petrol prices are proving to be among the key contributors to recent inflation increases, with the average price of petrol rising by 12.6 pence per litre between February and March, according to the Office for National Statistics (ONS).
The scale of that increase in petrol prices is unprecedented in a single month at least since the ONS first started collecting the relevant data in 1990.
Meanwhile, the cost of a litre of diesel jumped by as much as 18.8 pence per litre from February to March.
Concerns are growing among economists that inflationary pressures facing both businesses and consumers will stifle growth across the UK economy in the coming months.
The ONS said recently that Britain’s GDP expanded by just 0.1 per cent in February and there are fears now that the economy will begin to contract slightly as inflation cools activity across key sectors.
Reflecting on the latest data, Alpesh Paleja, the lead economist with the Confederation of British Industry (CBI), said: “The latest rise in inflation will not be the last. We’ll see another jump over April, as the rise in Ofgem’s energy price cap comes into effect.
“The result will be even higher costs for businesses, and a deep squeeze in the cost-of-living for households.”
Martin McTague, national chair of the Federation of Small Businesses (FSB) has argued that the “cost of living crisis starts with a cost of doing business crisis,” insisting that small firms need more support from government.
“There’s only so much the government can do about international supply chain disruption and its impact on raw material and fuel costs,” he said. “It can, however, do more to support small firms at the local level with energy costs.”
Mr McTague has also argued that now is the right time for policymakers to do more to address the “late payment crisis” which consistently impedes the cashflows of SMEs across the country.