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UKHospitality has warned that pubs, restaurants, and hotels may be forced to raise prices at the till following a sharp increase in national inflation.
The trade body stated that the sector is uniquely exposed to rising input costs and has no room to absorb further financial pressure.
The warning follows data from the Office for National Statistics (ONS) showing that UK inflation rose to 3.3% in the year to March, up from 3% in February.
The increase was largely attributed to motor fuel prices reaching a three-year high and a rise in food and non-alcoholic beverage inflation to 3.7%.
Chair of UKHospitality Kate Nicholls stated that hospitality businesses are highly exposed to these costs through food, drink, and transport.
She noted that the sector is already heavily taxed and warned that reduced consumer discretionary spending could further impact demand.
As a result, Nicholls called on the government to reduce the cost of doing business for demand-sensitive sectors.
She suggested that without targeted support, the combined hit of increased costs and lower spending would threaten the viability of businesses across the country.
Kate Nicholls, chair of UKHospitality, said: “The inflationary impact of the conflict in the Middle East is evident in today’s figures. Hospitality businesses are highly exposed to increased fuel prices, through the price of food, drink, transport and other key inputs. As one of the final links in the food supply chain, the sector cannot be expected to pick up the bill for increased costs down the chain.
“Hospitality is already one of the most heavily taxed sectors in the economy and there is no room to absorb further cost increases. Ultimately, it will result in price rises at the till, further driving inflation. The impact on consumer demand should be closely monitored, as our pubs, restaurants, cafes and hotels will be the first to feel the combined hit of increased input costs and reduced spending.”
Nicholls added: “The Government should be looking closely at how it can reduce the cost of doing business for demand-sensitive sectors like hospitality, which are uniquely exposed to these kinds of economic shocks.”
