Annual inflation is slowing, but food and beverage prices continue to rise
By the end of 2022, the prices of gas, clothes, and fun things to do will have gone down, which means that the inflation rate has been going down each year. However, the prices of food and drinks have been going up, which has made up for some of this drop.
According to financial analyst Nicholas Hyett, inflation rates continued to decline in December and now appear to have peaked in October last year. However, inflation in the hospitality industry remains notably strong, at 11.4% year on year. This represents the most significant level since 1991.
Hyett, an analyst at investing firm Wealth Club, explained: “Lower gasoline prices have been a key factor to the slowdown, and with oil prices again back around where they were before the Russian invasion of Ukraine, there’s likely to be further to go on that front. Lower oil and fuel prices, as a critical input into other sections of the economy, should eventually relieve pricing pressure across the board.”
The financial analyst did warn that it will take time for the benefit to reach people’s pockets, and with food and beverage costs continuing to rise, economic stresses are far from alleviating.
“For the time being, the cost of the living problem is expected to persist,” he stated. “10.5% inflation may be better than we’ve experienced recently but is still eye-watering by most standards. A winter of strikes is on the way, but stickier wage-driven inflation is also picking up.”
According to the Office for National Statistics, retail sales volumes are expected to fall by 1% in December 2022, following a 0.5% drop in November.
Rising energy costs, labor shortages, and rail disruptions pushed several hospitality firms in the UK to the brink of bankruptcy at the end of last year, with approximately 18 net closures every day in the fourth quarter of 2022, according to AlixPartners and CGA by NielsenIQ data.
The figures, published in the Hospitality Market Monitor, are depressing for an already troubled industry. The approximately 18 net closings per day in the fourth quarter of the year represent a 1.6% decrease in the market over a three-month period. During that time, the independent sector accounted for over 90% of all closures.