With the good news this week that the inflation rate has fallen to 3.2% the hospitality sector has highlighted underlying costs pressures in the industry that sees inflation in hospitlaity running over 50% higher than the national rate, with the NTIA calling for an intervention before a general election to reduce the VAT burden.
Kate Nicholls, Chief Executive of UKHospitality, said: “Inflation continuing to fall is very positive for the economy. We now need to see this reflected in an easing of interest rates, which will reduce costs for businesses and incentivise investment in growth.
“This is particularly important for parts of the economy where prices are more stubborn, like hospitality.
“Inflation in our sector is more than 50% higher than the national figure and this is before we see the effect of the £3.4 billion increase in rates and wages which hit the sector this month.
“With a clear trend of inflation easing across the economy, it’s time for central banks to support businesses and drive investment.”
Michael Kill CEO NTIA said, “It’s very hard to do anything but commend the slow in inflation with the recent report indicating a slight decline in inflation figures, now resting at 3.2%.
“However, it’s imperative to acknowledge that this decrease merely signifies a deceleration in price hikes, rather than a genuine alleviation of the burdens faced by businesses at the operational level. Despite this statistical dip, the reality ‘at the coal face’ remains unchanged – operating costs continue to suffocate our industry.”
“It’s crucial for the government to recognise that the path to recovery demands more than mere patience; it necessitates decisive fiscal action.
“Before the impending election announcement, we urge the government to address this pressing issue through a targeted intervention, particularly in the form of a VAT cut.
“Such a measure would inject much-needed relief into our struggling sector, enabling businesses to not only survive but thrive amidst these challenging times. Ignoring this imperative could risk prolonging the economic hardship faced by countless establishments within the Night Time Industries. We implore policymakers to act swiftly and decisively in support of our industry’s recovery.”