The British Chambers of Commerce (BCC) today publishes its Quarterly Economic Survey – the UK’s largest and most authoritative private sector business survey.
Four in five firms report rising prices as supply chain crunch continues
- 80% of firms in new survey saw an increase to their prices in the past year, with nearly half (46%) categorising these as ‘significant’. Only 2% saw a decrease
- The proportion reporting increased prices rose to 92% for manufacturers
- 75% of businesses with more than 50 employees said they had skills shortages within either their own business or those in their supply chain
New BCC data released today from a survey of over 1,000 businesses has thrown sharp focus on the impact of skills and commodities shortages for UK firms, with spiralling prices in evidence. The data show an overwhelming majority of businesses are raising prices as they face acute shortages and cost pressures - with vehicle fuel, shipping containers and utilities cited as the top areas of concern.
When asked if they had seen a change in the price of their goods or services in the past year, 80% of respondents in total reported increases, with 46% reporting significant increases and 34% reporting slight increases. 15% reported no change with only 2% reporting any kind of decrease.
For manufacturers the above question drew an even starker answer – 92% had seen an increase in the price of their good and services.
When asked whether they, or any business in their supply chain, had experienced either increased costs or shortages of a variety of commodities over the past 12 months the results were striking:
- Of all respondents: 52% cited vehicle fuel, 34% shipping containers and 30% utilities such as gas or electricity
- Of manufacturers: 50% cited steel, 47% shipping containers, 45% vehicle fuel, 39% paper or cardboard, 38% plastics or rubber, 29% chemicals, 19% semiconductors. Only 2% of manufacturers reported that they had not faced increased costs or shortages from the items listed.
Half (50%) of businesses surveyed reported that either they, or others within their supply chains, had experienced skills shortages in the past 12 months. This figure rose to 75% for larger firms with over 50 employees and was least prevalent among firms employing less than 10 people at 31%. Roles commonly mentioned included HGV drivers, engineers, warehouse staff, accountants, chefs and IT technicians.
The View from Business
The Commercial Director of a South West Food and Drink manufacturer said:
“Since June of this year we, and other businesses like us, have been heavily impacted by so many factors that take constant and daily fire-fighting and with no end in sight.
“Commodity supplies are not only hard to get hold of, with ever extending almost unworkable lead-times, but are increasing in price on an almost daily basis, with some as high as 58% since the start of the summer.
“Logistics and distribution charges have increased by up to 28%. Labour, we are down to just 55% of the staff that we had in May despite having implemented our third wage increase and different shift patterns to try and suit a wider market.
“These issues have caused us to have to rest, cap and even delist lines that we sell to the nations supermarkets, decline a large amount of sales and absorb write off costs.
“We have always prided ourselves on being a brilliant supplier to our customers, but these trying times are testing relationships that have been built on years' worth of high-quality products and excellent service.”
Shevaun Haviland, Director General of the British Chambers of Commerce, said:
“These figures present a deeply worrying picture of the difficulties that businesses are currently facing, across multiple fronts as supply chain disruption persists.
“Firms are facing huge pressures as they battle to keep on track for Christmas and provide the goods and services the UK needs, but we have yet to see any concrete steps to address these issues.
“Unless action is taken soon, firms could be forced to cut back on their capacity or limit the range of products they offer.
“The huge number of unfilled vacancies is placing further strain on staff having to cover, and Covid is also still with us. With more than 30,000 people a day having to isolate, it presents another on-going disruption to the workforce which businesses must grapple with.
“While there are some global issues at play, there are levers that the Government can pull to improve current business conditions, for example, the introduction of an energy price cap for SMEs and providing more temporary visas in the hardest hit sectors through expansion of the Shortage Occupation List.
“The new Supply Chain Advisory Group must look carefully at these and other solutions to the immediate and longer-term challenges.
“Firms also want to see a moratorium on all policy measures that increase upfront business costs for the remainder of this Parliament.”