Against a backdrop of rising interest rates and a deepening cost of living crisis, small retail businesses are facing a “tsunami of increasing costs”, the British Independent Retailers Association (Bira) warned today.
Bira was responding to news that the Bank of England is raising interest rates to1%, which it said was “inevitable yet not surprising”.
Rates have risen to 1% from 0.75% since December, and inflation is already rising at its fastest for 30 years, and is expected to breach 10% by the end of the year.
Warnings are also in place that the UK economy is set to shrink next year.
In response to this news, Bira’s CEO Andrew Goodacre said: “This latest increase to 1% seemed inevitable and we are not surprised to see revised forecasts expecting 10% inflation by the end of the year.
“Since last summer we have been warning of double digit supply chain inflation that would result in higher prices. However, retailers are doing all they can to limit the price increases as they recognise that the shoppers have less money to spend.
“Whilst we hope this latest increase reduces inflation, we worry that it will further damage consumer confidence and reduce expenditure. Furthermore, we are concerned about the rising cost of debt payments as a result in interest rate rises as many more independent retailers have increased levels of debt due to Covid.
We feel that government needs to review the options for paying back the bounce back loans and offer more flexibility to the businesses dealing with a tsunami of cost increases,” he said.