UK inflation climbed to 3.5% in April, a sharp rise from 2.6% in March, with steep increases in energy and water bills driving the surge. The jump, higher than the Bank of England’s forecast of 3.4%, marks the fastest monthly rise since late 2022 and has led to speculation that planned interest rate cuts may be delayed.
Kate Nicholls, Chief Executive of UKHospitality, said, “This significant increase in inflation is unsurprising given the £3.4 billion in annual cost increases that hit hospitality in April.
“It’s clear that, on top of continuing hikes in utility prices, the raft of additional costs from the Budget, which came into force in April, is putting unsustainable cost pressure on already strapped businesses. Regrettably, that forces up prices and so fuels inflation.
“This strengthens the need to tackle the ongoing cost of doing business crisis. The Government must look to bring down costs for businesses and it’s critical that the Bank of England meets market expectations to lower interest rates in the coming months.”
While the broader inflation rate climbed, sector-specific data told a more nuanced story with hotel and restaurant inflation slowing to 2.7% year-on-year. But operators remain under pressure, as behind the headline figures, cost burdens continue to mount.
Saxon Moseley, partner and head of leisure and hospitality at RSM UK, warned that rising food inflation poses a growing concern, “Prices have increased by 1.3% already since December… When factoring in alcohol, the rise in food inflation jumps to 4% – yet another cost increase that will put a dent in operators’ margins. Unfortunately, there’s only so much they can keep increasing prices, particularly as consumer confidence is already fragile.”
It means that, despite temporary relief in core inflation figures for accommodation and dining, the overall message from the sector is clear: sustained cost increases, coupled with cautious consumer sentiment, continue to put significant strain on businesses across hospitality.