UK inflation hits 3.2% - what does this mean for hospitality sector?

London outdoor cafe
Diners sit outside at cafe-style tables. (stephriddell/Pixabay)

The UK Consumer Prices Index (CPI) rose by 3.2% in the 12 months to the end of August, up from 2.0% in July.

The increase of 1.2 percentage points is the largest ever recorded increase in the CPI National Statistic 12-month inflation rate series, which began in January 1997.

The Office for National Statistics said this sharp increase was likely to be a “temporary effect” as last summer's Eat Out to Help Out scheme, kept prices in restaurants and cafes low.

“We expect inflation to continue following a bumpy path this year, as different factors feed irregularly into the monthly data. Base effects should dissipate somewhat next month, but rising producer price inflation - due to higher input costs such as freight and raw materials - could begin to be passed through to consumers over the coming months, especially as businesses look to recoup lost revenues from over the pandemic,” Hannah Audino, economist at PwC, said.

Our own report: In the Eye of the Storm: Inflation and the Hospitality Sector lays out the implications for the industry.

“The hospitality sector is one of those sectors directly impacted by both economic and socio-political developments,” the report said.

The likes of higher food costs, wage rises and labour shortages could all influence the industry.

Read the report - In the Eye of the Storm: Inflation and the Hospitality Sector