Rising inflation: Flexibility key to SME success

UK inflation has hit its highest level in almost six years, as the consumer price index reaches 3.1 per cent, putting a further squeeze on Britain’s cost of living.

The largest upward contribution to change in both the Consumer Prices Index including owner occupiers’ housing costs (CPIH) and the Consumer Prices Index (CPI) rates came from air fares which fell between October and November, but by less than a year ago.

Rising prices for a range of recreational and cultural goods and services, most notably computer games, also had an upward effect with inflation at its highest since 2010.

Falling prices in the miscellaneous goods and services category (including travel goods and financial services) provided the largest offsetting downward contribution.

A breakdown of the Office for National Statistics (ONS) data also showed an increase in food prices on a year ago, with transport and clothing/footwear costs rising.

Fuel and raw material costs for manufacturers increased dramatically when compared with a year ago, while factory gate prices also rose in November.

Commenting on the latest statistics, ONS Head of Inflation, Mike Prestwood, says: “CPI inflation edged above 3 per cent for the first time in nearly six years, with the price of computer games rising and airfares falling more slowly than this time last year. These upward pressures were partly offset by falling costs of computer equipment.

“The prices of raw materials and goods leaving factories continued to increase as oil and petrol prices continued to rise. Annual rises in house prices and rents continued to slow, with London seeing house price falls for the second month running.”

With UK inflation cutting disposable income, the weaker pound and a business landscape fraught with uncertainty, it is understandable that business owners are concerned. However, due to the size and nature of their businesses, SMEs have the advantage of being able to be flexible and quick to respond to changing market conditions. The key is to partner with the right specialist adviser who will guide you on your strategy and assist in making those all-important business decisions that will have the greatest impact on future success.

At Beavis Morgan, we know that running your own business can be very rewarding, provided the right structures are in place. We are well versed in working with SMEs and owner-managed businesses of different sizes across a range of industry sectors, so you can rely on our detailed understanding of the specific kinds of issues that can arise, and you can count on our expertise and ability to provide the right solutions.

For more information about how we can help you and your business, contact Steve Govey or your usual Beavis Morgan Partner.