The UK inflation rate has hit a two-year high this year, with a rise in motor fuel costs identified as the key factor.
According to the latest figures from the Office for National Statistics (ONS), the Consumer Prices Index (CPI) rose to 1.2 per cent in November – the highest rate of consumer price inflation since October 2014.
The CPI is the measure of inflation used by government, and is used to calculate the amount that prices change from year-to-year. The latest figures showed that goods and services were 1.2 per cent more expensive in November 2016 than they were for the same month in 2015.
According to ONS, “the upward contribution to the change in the inflation rate came from motor fuels”. CPI data showed that petrol prices rose by 1.6 per cent between October and November this year.
Many industries use Britain’s roads to operate, and self-employed workers and freelancers, who depend on travelling across the country to access clients, could feel the biggest hit from rising fuel costs.
The Federation of Small Businesses (FSB) has raised concerns of a hike in prices for company owners.
Mike Cherry, national chairman of the FSB, suggested that up until now small business owners had been able to “absorb the increased costs from inflationary pressures but the effects are now beginning to bite”.
“Many small businesses rely on road travel to transport goods, receive supplies and for their staff to get to work so the rising cost of petrol is a major concern,” Cherry said in a statement.
Mike Prestwood, head of inflation at ONS, looked to put a positive spin on the CPI’s figures for concerned entrepreneurs.
“November’s slight rally in the value of sterling eased the inflationary pressure on businesses importing raw materials,” he said in a statement.
Further to that, according to ONS the increase in domestic fuel costs was “partially offset” by a drop in the price of air and sea fares.
Cherry concluded that small business owners were facing a “period of domestic economic uncertainty”, with increases in costs from several directions. He cited the cost of auto-enrolment duties and rises in the National Living Wage as putting a further squeeze on the profits of small business owners.
“We want ministers to focus on measures that will help boost growth and jobs – like increasing the employment allowance and putting quarterly tax reporting plans on hold,” Cherry added.
In his recent Autumn Statement, chancellor Philip Hammond froze petrol duty for the seventh year in a row in an attempt to counter the rise fuel costs as a result of exchange rate fluctuations.
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