Mid-sized businesses in the West Midlands are preparing to raise their prices in response to spiralling inflationary pressures, according to new research from Grant Thornton UK LLP.
In its latest Business Outlook Tracker* survey, Grant Thornton found that one third (36%) of mid-market firms in the West Midlands have already raised their prices, with a further 28% intending to do so in the near future.
More than a third (38%) of these businesses expect a price increase to remain in place for at least 12 months, while 13% anticipate that this will be permanent.
The research also found that amid rising costs, wage inflation and energy bills, confidence in the mid-market has dipped. Just 64% of respondents in the West Midlands are optimistic about the outlook of the UK economy, a -6 percentage point (pp) decrease compared to February (70%).
The latest Tracker also recorded a fall in West Midlands respondents reporting revenue growth optimism – 66% of business leaders indicating they were confident compared to February’s total of 68%.
These challenges have also led to changes in investment priorities. Investment expectations for the next six months have dropped significantly across all areas monitored by the Tracker, except employee benefits (+12pp), R&D (+8pp), recruitment (+4pp) and technology (+4pp).
The most significant drop in the West Midlands (-14pp compared to the last Tracker) is seen in skills development. This is followed by employee wellbeing (-8pp), growing in international markets (-6pp) and plant, machinery and buildings (-4pp).
Sue Knight, Partner and Practice Leader at Grant Thornton UK LLP in the Midlands, said: “With inflation running at 9% and predicted to rise even further, the mid-market in the West Midlands is bracing itself for another challenging period. If they haven’t done so already, many are seriously considering when they need to increase prices in order to maintain acceptable profitability and cashflow levels.
“Acting quickly and decisively to manage rising inflation rates could mean passing on increased prices to the consumer, but management teams also need to be looking at every aspect of their business to identify potential savings.
“Due to the current situation, there’s been a real shift in the mid-market’s priorities, with the increasing uncertainty stalling investment expectations. This is likely because many businesses are facing a double squeeze, with almost every cost increasing alongside rising concern from the potential of slowing consumer demand.”