Businesses absorbed price hikes

19 May, 2023

Numerous hospitality businesses have indicated that they had to bear the burden of escalating costs instead of transferring them to customers, as the sector continues to face financial challenges.

The most recent report, "Business insights and impact on the UK economy," conducted by the Office for National Statistics (ONS), revealed that nearly 68.1% of businesses observed an increase in the prices of goods they purchased.

However, only 32.3% of these businesses raised their own prices in April 2023 compared to the previous month. This signifies that companies have incurred a financial impact due to the decision to absorb these rising costs.

As classified by the ONS under 'accommodation and food service activities', it is expected that no businesses in the hospitality sector will be able to reduce their prices in June.

Furthermore, 29.6% of businesses anticipate the need to increase their prices, while slightly over half (51.2%) foresee prices remaining unchanged. This data reflects the challenging pricing landscape faced by businesses in the hospitality sector.

Businesses in the sector were also surveyed about their turnover in April 2023 compared to March 2023, excluding any seasonal trading factors.

The results showed that 26.9% reported a decrease in turnover, 20.6% reported an increase, and the largest percentage share of 40.9% stated that their turnover had remained the same. These findings highlight the varied performance of businesses within the sector during that period.

Looking ahead to June 2023, a greater number of companies in the sector anticipate positive developments in their top-line performance. Over a quarter (27.5%) of businesses expect an increase in turnover, while only 11.9% forecast a decrease.

Additionally, four in 10 (42.7%) businesses expect turnover to remain consistent compared to the previous month. These expectations indicate a relatively optimistic outlook for the sector in terms of anticipated revenue for the coming month.

In early May 2023, businesses across various categories, excluding those that permanently ceased operations, were surveyed regarding the impact of price increases they had encountered.

The results revealed:

Impact of Price RisesPercentage
Affected in one or more ways63%
Not affected by price rises26%

The most commonly reported impacts were:

Had to absorb costs42%
Passed on price increases to customers27%
Changed suppliers11%

These figures remained relatively stable compared to the findings from early April 2023.

Refocusing on the hospitality sector, survey respondents were asked about the impact of energy prices in early May. The results were:

Energy Prices Impact:

Not affected6.5%
Production and/or suppliers affected65.1%

Overall Performance (April 2023 compared to April 2022):

Stayed the same41.4%

These figures were based on feedback from nearly 10,000 respondents and can be further explored in the data provided by the Office for National Statistics (ONS).

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