Herefordshire businesses struggle as cost-of-living crisis continues
Inflation rising above 10% and rising interests are just some of the problems facing local businesses
Herefordshire businesses struggle as the cost-of-living crisis continues. With inflation rising to over 10% and economists predicting the Bank of England will rise interest rates to over 2% early next year.
We spoke with Ian Taft from the Herefordshire Small Business Federation about the challenges faced by local businesses.
Mr Taft said, along with inflation and rising interest rates, we can add, a lack of farming subsidies, a lack of strategic planning from central government, Brexit and a shortage of both skilled and unskilled labour.
Mr Taft said, “it is almost a perfect storm, businesses are struggling with debt from the pandemic and coming out of the pandemic, that debt situation has manifested itself into lower sales as a result of rising costs for people”.
One of the key problems facing local businesses is staff shortages. Mr Taft added “some companies have the orders but do not have the staff to process the orders or manufacture the items”.
Farmers facing uncertainty
Farming is a key industry in Herefordshire and faces acute problems due to Brexit and a lack of strategic planning by central government.
Mr Taft said: “Replacement of the common agricultural policy still has not been completed because it is going through a trial period, it is due to come out in 2025.
"Farmers can apply for funding in 2024, but what are they supposed to do till then?”. You can listen to the full interview below.
In our interview Mr Taft said farm payments are ending, which is incorrect, he did issue a correction, saying "farm payments are gradually reduced with the largest payment recipients affected the most".
While many sectors face difficult market conditions, retail is the one struggling the most. On retail, Mr Taft said “I don’t think its too strong a word to say it’s being decimated”.
He added independent stores are suffering the most as larger retailers can take advantage of economies of scale.
Cost of living crisis
Interest rates and inflation go up
Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.
Energy bills
The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to £3,549 for an average home in October but a price freeze from the government restricted the typical bill to £2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.
Food prices
The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.
Prices at the pumps
The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.
Average cost of filling up a car with petrol hits £100
On 9th June 2022, the average cost of filling up a car with petrol hit £100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.