Record rise in inflation and your business

ended 15. September 2021

This morning, the Office for National Statistics announced a record rise in inflation. The Consumer Prices Index (CPI) rose by 3.2% in the 12 months to August 2021, up from 2.0% in July.

Essentially, the cost of living is getting a lot more expensive - in large part due to the knock-on effect of Brexit and the pandemic. With this in mind, a simple question:

  • Are you planning to increase (or have you already increased) the cost of your products or services to combat the impact of inflation?

Just a quick reaction will do. 2-3 sentences max… Deadline is pretty tight as we will issue this to the media mid-morning.

11 responses from the Newspage community

Star Quote
"Margins are already really tight in a very competitive marketplace so to increase prices to help combat inflation is a delicate balancing act and is often determined by what other players in the market do. Do we increase prices to maintain margin and risk being uncompetitive against the 'big boys', or do we accept that margins are going to be lower and remain competitive? It's a tough decision for all small business owners like myself."
Star Quote
"Inflation is putting businesses like mine between a rock and a hard place. I need to raise my prices to cover both the increased cost of living and my continued losses due to the pandemic, but I'm very aware that this can cause problems with customers. Right now, rising infection numbers mean I'm getting more and more last-minute cancellations and no shows, which is piling on the pressure financially just as the cost of living is going up."
Star Quote
"I'm trying desperately not to increase prices of my products despite being slammed by material and manufacturing costs across the board but I feel it will be inevitable. It's a double-whammy for us business owners as we have to cover our own higher living costs while also keeping our offering affordable for our customers. It's a no-win situation right now."
Star Quote
"While the cost of food is starting to soar, we have kept our prices at the same level for the past two years and have no intention of increasing them for the foreseeable future. It's important for us to recover from this pandemic and maintain customer loyalty. Putting up the prices for our catering would just leave a sour taste."
My VIP Rewards are here to help to support people with the increase in cost of living. It’s tough! And we want to help people to save on their everyday spending , supermarket shopping, Christmas and entertaining the kids. We have no plans to increase our prices but we do have plans to increase our discounts so people can save more money. Christmas is always such an expensive time and we can save people lots of money! It’s not all doom and gloom! Our app helps to combat!
"As inflation takes hold, prices will have to be adjusted to take account of this. The biggest worry here is not increasing prices, it’s that many people have taken mortgages out on homes that are potentially overpriced and the main lever the Bank of England has in order to control inflation is the Bank of England base rate. If the Bank of England decide that now is the time to raise the base rate to calm inflation, we could very quickly see house prices come down as a result along with interest rates rising that coupled with increased cost of living could spell trouble for a lot of people. Especially new homeowners with only 5% equity."
"The latest data makes for rather painful reading. In general, we have put the prices of 2022 holidays up by 5% to cover anticipated inflation and rising costs for our homeowners. To be honest, I wish we had gone higher. Anecdotally we have heard of prices being hiked up by 40-50% but we feel it is important to keep our returning guests loyal and to ensure they feel they are still receiving perceived value for money. Competition will be stiff once foreign travel returns with a vengeance coupled with an oversupply of holiday lets."
We must remember that if we raise our price, we risk losing customers, especially those who are now being hit by the removal of the Universal Credit "uplift payment of £80 per month" We are dammed if we do raise prices and dammed if we don't..
In short, yes. Regardless of inflation, prices of certain products have been driven down far too low compared to the true costs of creating these products sustainably. Not always, but many times low prices come at the expense of something, whether that be the planet or the quality, or someone. However, moving forward, pricing should be more focused on first-party data and developed around HOW your consumer engages with your business. A frequent consumer is more likely to be price-sensitive, however, their loyalty can be rewarded in line with this. Whereas, a less frequent consumer may be less price-sensitive and more 'experiential' in their purchasing. Pricing in line with your consumer's purchasing habits from first-party data, like loyalty schemes will help navigate this next season.
"I'm sure we are not alone in being placed in a difficult dilemma. We had to reduce our fees during the lockdowns of the past 18 months as our clients were themselves having cashflow trauma, and even though we have now increased our prices, they are still considerably below pre-covid levels. If this inflation figure becomes the norm rather than a 1 month blip, we will have no option but to increase our fees again, since we ourselves have rising costs which have to be covered from somewhere and can't be covered by reserves indefinitely. We do appear to have the perfect storm at the moment, an economy recovering from Covid, a complete lack of equilibrium between job vacancies and increasing unemployment and a Government which is looking to increase the tax burden rather than reduce it. Covid pushed the reset button on society in so many ways, I'm just not sure the economy has yet finished loading after Ctrl-Alt-Del."
It's a fine balance as my digital agency focuses on providing affordable services to tech startups so whilst inflation has to be taken into account when reviewing pricing, so does making sure we have a smart business model in place. For us this means working with remotely distributed specialists in countries like south africa & Slovenia where we can still pay well yet provide affordability to clients.