Small business call for action as input price growth hits record-high 18%

The Federation of Small Businesses said the gulf between the rate of input and consumer price growth underscores the efforts of businesses to absorb costs rather than pass them on responding to new Office for National Statistics (ONS) figures.

FSB national chair Martin McTague said the latest data from the Office of National Statistics revealed producer input price inflation at a record-high 18.6 per cent, and the consumer prices index at 9 per cent, making it hard for small firms to pass higher operating costs onto customers, fearing that doing so will hamper competitiveness.

“More and more are being left with no choice, however, as inflationary pressure collides with an increasingly tight labour market, making it harder and harder to find the right people, and pushing up the wages needed to keep them,” he said.    

“We hear a lot from politicians about the cost-of-living crisis, but very little about the cost of doing business crisis which underlies it.”

Mr McTague said the government must now look at targeted interventions that will do most for local economies hardest hit by the pandemic that are now faced with low growth and surging inflation.  

“It can’t control the wholesale price of oil and gas, but it can go further to help small firms with property costs – increasing the ceiling for small business rates relief and extending the energy support issued via the council tax system to the rates system,” he said.

“With employment costs, including national insurance, now way up on where they were this time last year, installing a sick pay rebate for the smallest businesses would give them a measure of breathing space.

“Our debilitating poor payment culture worsened over the pandemic. Here we have an area where government can take action – by making audit committees directly responsible for supply chain practice – without it costing a penny.  

“More widely, with so many firms lost over lockdowns, we need policymakers to come forward with the Enterprise Strategy that we were promised a long time back – clearly outlining how, now we’ve lost the New Enterprise Allowance, government intends to spur those thinking about starting up to turn vision into reality, thereby shoring up our already foundering recovery.”