Sectors battling cost hikes the most as UK firms brace for challenging year
In light of a report from the Confederation of British Industry (CBI), which found that over a fifth (22%) of companies expect significant profit declines in the coming months – new research has revealed the UK industries currently grappling with the largest cost increases.
With rising inflation, ongoing supply chain issues, and further tax rises looming – experts at money.co.uk business savings accounts have analysed the latest Business Insights and Conditions Survey (BICS) to reveal the businesses facing the steepest cost hikes and offer tips to help cut costs.
The UK industries that have the most significant cost increases
Rank | Industry | Businesses where prices increased |
1 | Accommodation and food service activities | 39.8% |
2 | Manufacturing | 26.8% |
3 | Construction | 26.4% |
4 | Wholesale and retail trade & repair of motor vehicles and motorcycles | 25.9% |
Leading the ranking, almost two in five (39.8%) businesses in the accommodation and food service activities sector saw price increases, highlighting the pressure on industries reliant on food and accommodation. Factors such as inflation in food prices, increased energy costs, and higher wages likely contributed to this figure.
Over a quarter (26.8%) of businesses in the manufacturing sector experienced cost increases. Supply chain disruptions, rising energy prices, and higher raw material costs likely played a role. These challenges make production more expensive and stretch profit margins, meaning businesses in this sector need to find ways to offset this, like streamlining operations or raising product prices.
Closely following manufacturing, 26.4% of construction businesses reported higher costs. This sector has long been affected by fluctuations in the price of materials, particularly for essentials like timber, steel, and concrete. Labour shortages and increased transportation costs have made these pressures worse, causing issues with ongoing and future projects.
25.9% of businesses in the wholesale and retail trade and repair of motor vehicles sector reported cost increases. The rising costs of importing goods, fuel, and supply chain issues likely contributed to this. Retailers often face the dilemma of absorbing or passing these costs on to consumers, which can affect competitiveness and sales. For motor vehicle and motorcycle repair businesses, higher fuel prices and increased costs for parts and materials have put additional strain on their businesses and profits.