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.
Investors representing over $3 trillion of assets under management from across North America, the Gulf, Asia and Australia will participate in InvestConnect, a new UK investment fund. Aimed at connecting the UK’s nations and regions to trillions of pounds of global capital, the new platform was developed in consultation with professional investors, government partners and the UK's nations and regions.
The Chancellor, Rachel Reeves, has announced an expansion of the British Business Bank’s (BBB) Growth Guarantee Scheme (GGS). This provides a 70% government guarantee on commercial loans to SMEs of up to £2 million, cutting credit risk.
