Analysts are warning in the coming months that council tax, water and electricity bills is set to increase in April, this is being described as an “awful April.”
Businesses are set to take a massive hit as National Insurance Contributions will rise for employers and the minimum wage is to increase from 1 April, this will have a knock on affect as prices will rise further as companies will look to recoup losses following rachel Reeves controversial Autum Budget.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said, “Awful April risks kick-starting inflation again.
“The energy price cap is forecast to go up by £85 to £1,823, which would be its highest level since the beginning of last year. This is on top of rises in everything from water bills, up £123 on average, to council tax, up an average of £109.
“The Bank of England is expecting inflation to peak at 3.7% later this year.”
Kris Hamer, Director of Insight of the British Retail Consortium, said, “Headline inflation fell marginally in February, driven by marginal drops in housing and household services and clothing and footwear entering deflation.
“Despite continued cost pressures, namely energy price volatility, food inflation remained unchanged. There was good news as some dairy products such as milk, cheese and eggs all saw price drops on the month.
“Heavy clothing and footwear discounting continued into February, as fashion sales continue to suffer due to unseasonal weather throughout the month.
“Retail operates on tight margins and it would be impossible to absorb all £5bn of new costs which hit the industry in April.
“Food inflation has jumped significantly in recent months and is forecast to hit 5% by the end of 2025 as a result of the costs arising from the Budget. On top of this, retailers are still burdened by an outdated business rates system. It is vital that the government’s reform of business rates doesn’t impose additional costs onto retailers. Reform must leave no shop paying more.”
David Bharier, Head of Research at the British Chambers of Commerce, said, “Today’s data showing the CPI rate slowed to 2.8% in February is good news, but it’s too early to be certain on the direction of travel.
“Volatility will be a key feature for the next few months. SMEs are battling shocks from both home and abroad in the form of domestic tax increases and a looming global tariff war.
“Many firms tell us they will have to raise prices and rethink recruitment when NICs and NLW increases kick in next month. Investment is also likely to suffer until greater certainty emerges.
“Our latest forecast expects inflation to remain elevated over the coming months, staying above the Bank of England’s target.
“As the Chancellor prepares to deliver her Spring Statement this lunchtime, firms are under no illusion about the challenges they are facing right now.
“If the inflation rate continues to go into the right direction, further interest rate cuts could follow, which will be greatly welcomed by SMEs looking for respite on borrowing costs. But SMEs are facing a major squeeze right now and they urgently need the Chancellor to provide clarity and a sense of direction in today’s statement.”
