Over the past few months, we’ve observed significant price increases in several of our essential supply chains – a pattern that we anticipate will continue throughout 2023. The rise in prices can be attributed to various factors, some of which have affected numerous industries, while others are unique to the technology sector.
Despite our efforts to identify cost savings opportunities and prevent price increases from impacting our customers, we’ve reached a point where price adjustments are necessary to maintain our current level of quality and service.
Although our commitment to offering competitive prices remains firm, we’re more resolute than ever to assist you in finding optimal solutions for your company. In this article, we’ll explore the reasons for the price increase and provide recommendations for mitigating the impact on your business.
Recently, the Bank of England announced that they will be raising the interest rate to 4% – the highest level since the 2008 recession. Inflation is currently around 10% the BoE’s target is just 2%.
The raise in the interest rate will make it more expensive for some businesses to borrow money, as companies will face higher loan rates.
At this moment in time many people in our country are struggling with their finances and their business(es) due to rising inflation. Over the last few years, we have had to mitigate business costs, as to not pass the increases onto our clients. Unfortunately, our hand has been forced by recent increases by our industry suppliers, such as Microsoft and BT.
The CPI (Consumer Price Index) rate rose by 10.5% in the 12 months to December 2022. Inflation has risen drastically due to the effects of many different events occurring simultaneously globally within society at the moment.
Sky News reported that ‘2 in 5 (44%) working-age households reported being either behind on or struggling with housing-related costs in November.’ Because of these rising figures, many businesses, including ourselves have increased wages and provided a ‘cost-of-living’ bonus to employees. With many businesses implementing wage increases between 5 – 10%, the cost of staff has risen tremendously. BDR Group employs 275+ staff across the UK.
As mentioned previously, our suppliers are raising their prices, with one of our biggest suppliers, BT, who are increasing prices by 14.4%. These increases are making things more expensive for consumers and businesses alike. BT aren’t alone – Yahoo! News says that ‘29% of UK firms are increasing their prices’ – with 36% of businesses bearing the brunt of the costs, absorbing them where they can.
BDR Group has, for a long time, been absorbing these price increases and have been mitigating the rises to our customers, in efforts to help our clients in these times of high inflation and costs.
Please note that BDR Group does not hold any political views.
One of the biggest drivers to inflation currently is the ongoing conflict in Eastern Europe; Russia’s invasion of Ukraine. Russia is Europe’s biggest ‘petrostate’, with around 45% of its federal budget coming from the sale of LNG and oil and holding 14% of the world’s supply of oil. Its biggest customers were Western European countries, until they stopped buying because of the invasion. Not purchasing Russia’s energy en masse has been a massive blow to their economy and they have sought other ways of generating state income; selling to China and other nations at much lower rates.
There is now a lot of fear surrounding shortages of LNG and Oil from investors – all of which are driving the prices of energy resources up. These fear driven price increases on energy resources saw 31 UK energy companies close their doors in 2022.
With Russia planning a counter-offensive early this year, prices are most likely to rise again as uncertainty looms.
Because of our exit of the European Union, we have now left the EU’s internal energy market, making it far more difficult to obtain energy at cheaper rates and at the best times – not a good combination with the existing conflict in Europe.
The UK also faced logistical issues with HGV drivers transporting goods between the UK and the wider EU – causing mass shortages in household goods, making the cost of said goods far more expensive than usual, as they became harder to obtain – raising the CPI. This issue also affected businesses buying supplies and raw resources for their companies, causing some to temporarily/permanently close down.
These closures of businesses and the rise in CPI paired with the pandemic, created a catalyst for the cost-of-living crisis we are currently experiencing in the United Kingdom.
The COVID-19 pandemic has meant that many businesses simply could not operate during this period; closing their doors, some after decades of trading.
Because of this, the UK economy took a massive blow and unemployment rose. With more people holding onto their money and not spending locally, there has been less capital for businesses to hire new staff or reinvest in local economy, usually opting for larger businesses with lower prices.
Looking at all of the data and the issues that we face as a society and as business people, it’s clear to see that the UK is currently facing a cost-of-living crisis; heavily affecting people and business across the United Kingdom.
Many of us have felt the effects of the crisis and this isn’t limited to multinational corporations and their employees.
Because of this, many of our suppliers have increased their pricing to support their staff and ensure that they continue to trade.
Whilst since the crisis, we have mitigated price increases to you, the customer, through cost reduction measures; we have conducted thorough financial analysis and have come to the unfortunate conclusion: that we will now have to increase our prices for selected services and products. We never take price increases lightly and will continue to be deploying our cost-reduction measures, alongside these un-welcome increases.
Don’t worry – we’ve carefully considered the increases and have done so in conjunction with the PPI (Producer Price Index), as released by the ONS. We have not unnecessarily made any changes to pricing.
We too, as a business, understand that price changes aren’t good news, and we welcome any feedback or queries you may have regarding this.
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