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FIRMS FORCED TO HIKE BY INFLATION, SAY CAMPAIGNERS JACK BARNETT BUSINESS groups said many businesses had no choice to rise prices after a Bank of England rate setter yesterday said that some companies are pursuing so-called ‘greedflation’ by pumping up prices to exploit strong consumer spending. Catherine Mann, an external member of the Bank’s rate setting monetary policy committee (MPC), said she is concerned firms’ “strong pricing power” risks keeping inflation high. “Even in the face of the cost of living crisis there are still a lot of people out there who are willing to pay higher prices, and firms are willing to set their prices high,” she told Bloomberg. Companies have been squeezed by soaring energy prices, wage bills and transport costs over the last year, strengthening incentives for them to raise prices to protect their bottom lines. Producer inflation – a broad measure of input cost increases calculated by
the Office for National Statistics – is running at more than 14 per cent, above consumer price inflation of 10.1 per cent. Bank governor Andrew Bailey and the rest of the MPC’s ten straight interest rate increases to a 15-year high of four per cent has also lifted the cost of repaying debt for firms. A big chunk of UK businesses’ debts are on floating rates, meaning their interest bills are highly responsive to changes to official interest rates. Mann yesterday reiterated she thinks “more needs to be done with rates”, a position she has vocalised a few times over the last month. Markets suspect the MPC will bump rates up 25 basis points at its next meeting on 23 March. “Although many businesses have been increasing their prices, they have also absorbed a significant level of cost increases into their margins,” Alex Veitch, director of policy and public affairs at the British Chambers of Commerce, told City A.M.
Companies that do take advantage of pricing power typically hold high market share and are big players in their industries. Britain’s small businesses “have been hammered by a cost of doing business crisis since inflation started soaring around this time last year,” Tina McKenzie, policy chair of the Federation of Small Businesses, told City A.M. “Small business margins are balanced on a knife-edge and small firms are only raising prices as a last resort to keep themselves afloat, having already absorbed as much as they possibly can in order to stay competitive,” she added. There have been instances of big companies hoisting prices far and above headline inflation. Regulator Ofcom has launched a probe into mobile phone providers after it emerged customers were facing an up to 14 per cent bill increase. Tesco chair John Allan got into hot water last month for suggesting food producers were hiking prices above inflation.
LOUIS GOSS LONDON’s cabbies will have something else to talk to you about the next time you step into the back of a black taxi – their green ambitions. The number of electric cabs now outnumbers the diesel-powered fleet on London’s roads. Electric taxis have boomed over the past five years, following Transport for London’s edict requiring all new cabs to be “zero emissions capable”. The London Electric Vehicle
Company’s purpose-built hackney carriage, the LEVC TX, is currently the only black cab capable of meeting TfL’s emissions requirements. LEVC TX taxis now account for 40 per cent of all black cabs in London, meaning they are now more common than their diesel-powered counterparts for the first time. The electric taxi’s rise to dominance comes just six years after the London Electric Vehicle Company first started producing the cars at its Coventry manufacturing facility in 2017.
Now even Foxtons tells young Londoners to look further afield for a house LAURA MCGUIRE THE BOSS of London-focused estate agent Foxtons has warned “people are going to have to move” due to a lack of available properties in the capital –with London’s business groups saying the city’s competitiveness was at risk.
Foxtons boss Guy Gittins told the BBC yesterday that the shortage of rental options is now “dramatic”, with prices spiking significantly over the past year. Paul Swinney, director of policy and research at Centre for Cities, told City A.M. the capital has already seen a “squeeze” on the pool of
talent it has been able to recruit from in the last 15 years and that a lack of suitable homes for aspiring professionals is “bad for its economy overall”. He explained:”The difficulty in trying to find accommodation points to a
long-running challenge in the capital – it hasn’t built enough homes to house the people who want to live here. “If they [look elsewhere] it’ll be bad news for London’s businesses,” he continued. Soaring inflation and a hike in utility bills have been blamed
for an increase in rents in the past few months, however Gittins said that a disparity between supply and demand was the real issue. “The main issue is not affordability for the majority of the market – it’s the stock issue.” £ CONTINUED ON P2
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