Many UK businesses struggling with rising costs are considering increasing the prices they charge customers, a new survey of Chartered Accountants has found. Should freelancers up their rates to keep in line with inflation?
ICAEW surveyed its UK members from 17 to 22 June 2021 on their organisations’ experiences over the last three months, looking at changes in customer demand, access to supplies and input costs.
What’s to blame for these price hikes?
- 60% of businesses said the increase in costs was because of a rise in the cost of raw materials.
- 44% said their costs had increased because of a rise in the cost of transport.
- 62% of businesses reported an increase in customer demand over the past three months.
- 64% of businesses said they had experienced supply shortages over the last three months.
- 90% of businesses whose supplies come mostly from outside of the UK said they had seen the prices they were charged increase, compared to 70% of businesses who sourced supplies mainly from the UK.
70% of companies that have seen their costs increase may raise their prices over the next 12 monthsICAEW
Almost two-thirds of businesses reported they had experienced supply shortages over the last three months and said their costs had increased because of this.
Businesses who import most of their supplies from outside the UK were more likely to have seen their costs rise, compared to those who mainly source supplies from within the UK.
Manufacturing was particularly affected, with 92% of businesses in the sector reporting that the prices they were paying for supplies had increased. Unsurprisingly, this sector was more likely to say that they would increase their selling prices than others.
“Our members – who work in businesses in every UK region and economic sector – are reporting long lead times for raw materials and components, disruptions to supply chains because transport companies are unable to recruit drivers, plus delays at the border as our trading arrangements with Europe have changed,” said Iain Wright, ICAEW Managing Director, Reputation and Influence.
“Many businesses who have experienced cost increases are now planning to increase their prices as their ability to meet the post-lockdown surge in demand is constrained by supply hold-ups and associated cost pressures.Iain Wright, ICAEW Managing Director, Reputation and Influence
“Businesses can look for other sources of supply or devise workarounds, but the government and the Bank of England must also do everything they can to address the inflationary risk, reduce supply blockages and enable businesses to bounce back. This is particularly important over the coming months as various Coronavirus support schemes come to an end. Businesses need authorities to get inflation under control before it spirals upwards while at the same time keeping the strong recovery on track,” said Wright.