Business News England: Inflation, Export Guarantees & Tax Updates

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Inflation on the Rise: What October's Figures Mean for Businesses

The Consumer Prices Index (CPI) for October 2024 rose to 2.3%, up from 1.7% in September, according to the Office for National Statistics (ONS). This marks the first rise in inflation since July, creating ripple effects for businesses, policymakers, and consumers.

While the increase was expected, the Bank of England has already signalled that any future base rate cuts will happen gradually. The latest CPI figures make it unlikely that rates will drop further when the Bank meets in December.

Key Drivers of Inflation

The ONS highlights higher energy costs as the primary contributor to October's inflation. However, some factors helped offset the increase:

• Falling ticket prices for live music and theatre.
• Lower raw material costs, easing business expenses.

Despite these offsets, certain sectors faced notable price hikes:

• Services inflation (e.g., haircuts, hotels, and airfares): Rose to 5%.
• Alcohol and tobacco: Prices increased sharply.
• Food inflation: Remained unchanged from September.

Impact on Businesses

The inflation rise, while modest, presents specific challenges and opportunities:

1. Energy Costs

• Reassess energy usage for potential savings.
• Explore alternative suppliers or pricing plans to manage rising costs.

2. Pricing Strategies

• For service-based businesses, rising costs affect consumer spending.
• Balancing price adjustments with value-added offerings will help retain customer loyalty.

3. Cost Control

• With raw material costs falling, manufacturers and retailers should consider locking in favourable supply contracts.
• Reassess profit margins to ensure long-term sustainability.

Economic Outlook

The Bank of England projects inflation to rise temporarily before easing in 2025. For now:

• Interest rates are unlikely to increase sharply, but further rate cuts may be slower than hoped earlier this year.
• Businesses should plan for borrowing costs to remain relatively high in the short term.

While October's inflation figures indicate a mild uptick, sector-specific challenges—particularly in energy and services—highlight the importance of flexibility and proactive planning.

By fine-tuning strategies and maintaining cost efficiency, businesses can turn this period of inflationary growth into an opportunity for resilience and innovation.

See: ONS Consumer Price Inflation

New UKEF Guarantee Boosts Opportunities for UK Engineering, Design, and Technical Services Firms

UK Export Finance (UKEF), the UK's export credit agency, has launched the Early Project Services Guarantee (EPSG), an initiative aimed at helping British engineering, design, and technical services firms secure international contracts.

This new scheme is designed to make UK expertise more attractive to overseas buyers by filling a financing gap for the early stages of major projects. Read More...