There is growing evidence that consumers are facing bill hikes on many fronts after Next became the latest to warn of upcoming price rises.
The homewares and fashion retailer said it would implement an “unwelcome” 1% price rise this year to help cover a planned £67 million increase in its turnover. salary.
He attributed the change in employer contributions to national insurance, announced in the budgetwhich should come into force in April.
The chain’s announcement, which also urges caution about the 2025 economy, is the latest evidence of the growing cost pressures facing households and businesses.
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While business lobby groups have united around a central message about threats of price rises to offset fiscal costs, Sky News analysis showed there is a threat of larger-than-expected increases in energy bills from April due to low gas storage levels across Europe.
Consumers also face price increases that break inflation. water bills And housing tax.
Sky News reported last week that the combined energy, water and housing tax hit, from April, would amount to £270.
New data from Kantar Worldpanel released on Tuesday shows that food inflation reached an annual rate of 3.7% last month.
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This is its highest level since March last year, reached despite deep discounts by stores to retain customers ahead of the main Christmas shopping period.
The report showed that prices were rising fastest in refrigerated smoothies and juices, chocolate confections and skin care.
The current inflation rate, at 2.6%, is well below the peak above 11% seen following the energy-driven cost-of-living crisis that followed Ukraine’s invasion of Ukraine. Russia in early 2022.
But the expected pace of interest rate cuts has occurred more slowly than initially expected due to sticky elements, such as services inflation, which have prevented the Bank from reducing borrowing costs.
Economists predict that the inflation rate will move closer to 3% in 2025, reducing the chances that the discount rate will fall from the current level of 4.75%.
Rising interest rates are increasing the cost of home loans, exacerbating the feeling among millions of households that the cost of living crisis continues in full swing.
Prices, overall, have not fallen. They are simply increasing at a slower annual rate.
Businesses have warned that the effects of the budget are not only likely to increase prices, but also affect employment, wages and investment.
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The retail sector described Christmas sales for the non-food sector as “disappointing” in a context of continued budgetary pressure.
In its Christmas trading update, Next said of its outlook for the year ahead: “We believe UK growth is likely to slow, as tax increases on employers and their potential impact on prices and employment are starting to have an impact on the economy. »
Data released Monday suggests manufacturing and service companies job losses at fastest pace since January 2021 last month.
A Treasury spokesperson responded: “We have presented a single parliamentary budget to wipe the slate clean and provide the stability businesses desperately need.
“We have ensured that more than half of employers see either a reduction or no change in their national insurance bills, and by capping the corporation tax rate at the lowest level in the G7, creating mega pension funds and establishing a National Wealth Fund, we are restoring political and financial stability, creating the conditions for economic growth through investment and reforms.
“This is just the start of our plan for change which will unlock investment, enable Britain to build itself through planning reform and use a modern industrial strategy to deliver the certainty and stability that businesses need to invest in the UK’s growing and high-potential sectors. This will improve the situation of all regions of the country.