In January the Retail Price Index leapt to 4.4%, the highest rate since 1991. At the time CPI annual inflation, the Government's target measure, jumped to 3%, a full percentage point above the Bank of England target. Warned in advance of these figures the Bank of England acted to cool the economy and put the interest rate up by a quarter point, to the surprise of the City.
TSA has long argued that business costs were rising and its research highlights the effects of of spiralling labour, utilities and diesel costs.
Over the past three years, textile rental firms have seen their “inflation rate” rise by 25%, with margins squeezed even tighter. Still the continued to absorb much of the rises rather than increase their charges to customers.
That position cannot be sustained any longer.
The Bank of England hopes that interest rate rises will damp down consumer demand, but they will also halt investment as money. itself becomes more expensive.
Interest rates are a blunt measure for controlling an economy. Businesses, both in textile care and in the wider economy now need stability.
This will give them the confidence to invest in the future,
Instead businesses currently feel stifled by regulation and red tape.
This month, London faces the extension of the Congestion Charging zone westwards into Kensington and Chelsea. The prospect of the “Low Emission Zone” for lorries putting further strain on distribution, which is already suffering from over-zealous parking enforcement.
Despite such restrictions, the outlook for 2007 is still positive.
Consumer confidence is high. Hotels are welcoming more and more guests, while London looks forward to the commercial opportunities arising from the 2012 Olympics.
Businesses in our industry have honed their competitiveness against the background of a relatively low cost environment.
Now they must make sure they maintain the quality and consistency of their customer service by charging realistic prices to offset the rising cost of doing business in the UK.
