Inflation figures for January 2025 were released last week and showed a surprising jump to 3.0%, up from 2.5% in December.
The Office for National Statistics (ONS) reported that the largest upward contribution to the change came from transport, and food and non-alcoholic beverages.
The upward pressure in transport costs came from air fares and motor fuels. Traditionally air fares increase in December before falling in January, however January 2025 saw the smallest January fall since January 2020.
Many businesses are feeling the pinch of increasing costs and news that inflation is rising may not be good news. Some economists believe that the rise will not affect the Bank of England’s plans for the interest base rate – the Bank has already forecast that inflation will increase to 3.7% later this year. However, regardless of this, inflation can squeeze profit margins and put a strain on cash flow.
However, inflation doesn’t have to derail your business. Read on to see how with the right strategies you can mitigate the impact and even uncover new opportunities. Here are some key steps you can take to navigate inflationary pressures.
Review pricing regularly
During periods of rising inflation, it’s essential to review your pricing strategy. Ensure that your prices are reflecting the increased costs of goods and services.
This can be easier said than done because of not wanting to upset your customers. So, one strategy could be to look at smaller, incremental increases rather than implementing one large hike.
Also, be transparent about the reasons behind any changes – many customers understand inflationary pressure and appreciate it when they are clearly communicated with.
Focus on efficiency
Look for areas within your business where you can improve efficiency. Perhaps you have opportunities to eliminate areas of wastage, or there are processes that could be automated, or you might be able to renegotiate contracts with your suppliers.
As an example, switching to digital invoicing or using cloud-based software may reduce your administrative costs. Small wins can be worthwhile as each small saving adds up over time.
The UK unemployment rate has risen to 5% in the three months to September, the highest since early 2021, according to the latest figures from the Office for National Statistics (ONS). The increase was slightly higher than expected and adds to signs that the jobs market is starting to soften.
The Department for Work and Pensions (DWP) has launched a national campaign to offer UK businesses access to no-fee specialist recruitment support through Jobcentre Plus. The service is available to all businesses, regardless of size or sector.