UK inflation rose to its highest level in eight months in November, according to figures from the Office for National Statistics (ONS).
The Consumer Price Index hit 2.6% last month, up from 2.3% in October. It was driven by the rising cost of petrol, groceries, and an increase in tobacco duty in the Autumn Budget.
“The continued increase in inflation is concerning, and inevitably makes day-to-day life harder for businesses and consumers,” says Kate Nicholls, chief executive of UKHospitality.
“Combined with lacklustre growth figures, it makes for a troubling economic picture.”
Nicholls adds that incentivising growth should remain the central goal for the Government, despite the inflation figures, and says the Bank of England can play an important role by lowering interest rates further when it meets on Thursday (19 December).
However, as reported by The Guardian, economists say the reading all but guarantees the Bank of England will keep interest rates on hold at the current level of 4.75% amid concerns over persistently high inflation.
With regards to hospitality, Nicholls says the biggest barrier to growth remains the planned changes to employer National Insurance contributions (NICs), which will go up from 13.8% to 15% in April next year, with the threshold at which businesses start paying National Insurance on a workers' earnings lowered from £9,100 to £5,000.
To help mitigate the impact of the employment tax measures, the trade body has called on the Government to create a new employer NICs band from £5,000 to £9,100 with a lower rate of 5%; and implement an exemption for lower band taxpayers working fewer than 20 hours per week.
“We urgently need the Chancellor to rethink these changes to protect businesses and team members,” says Nicholls.
