The cost of living crisis has become a buzzword for 2023 and is something that many businesses could sum up as ‘challenging’ if nothing else. Through 2022 and into 2023, increases in the cost of everyday goods because of record-breaking inflation has made running a business a very expensive affair and as a result is putting huge amounts of pressure on small businesses nationwide.
Businesses are now working hard to try and control their finances through the remainder of 2023 – something which could prove to be crucial over the coming months in the wake of the annual April price hike, which is set to see phone, broadband and TV service providers increase their fees by up to 17.3%, potentially affecting millions of personal and business customers, further increasing their living costs.
According to Money Saving Expert (MSE); BT, EE, O2, Plusnet, Shell, Sky, TalkTalk, Three, Virgin Media and Vodafone will be increasing their prices by up to 17.3% in the spring, even to customers who are mid-contract. It’s typical for such service providers to increase their prices each year in response to inflation by using either the consumer prices index (CPI) or the retail prices index (RPI). Typically, when inflation is low, so are the price hikes, however the past 12 months have seen inflation hit record-breaking highs and therefore both CPI and RPI calculations are significantly higher this time around.
This, combined with the extra 3% – 4% increase that providers add on to the CPI and RPI calculations means that this year, some suppliers will be charging customers up to 17.3% more for their mobile, broadband, TV or other telecoms-based service.
One of the biggest contributors to inflation over the past year has been a rise in energy prices as a result of several global factors. Not only has this increased living costs for businesses and individuals, but it’s also increased the cost of the production and manufacture of many everyday products, creating a snowball effect which is seeing people stretch their finances to breaking point.
According to the Office for National Statistics:
“Electricity prices in the UK rose by 66.7% and gas prices by 129.4% in the 12 months to January 2023, and were some of the main drivers of the annual inflation rate. As energy prices continue to rise, just under half (48%) of adults who pay energy bills said they found it very or somewhat difficult to afford them. The impact of rising energy prices is causing people to change their behaviour over winter.”
Energy bills across the board are expected to rise again in April 2023, further contributing to a rising cost of living, despite support being made available to businesses.
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The energy bill relief scheme was set up to assist businesses through increased energy costs. Under this scheme businesses received a discount on energy prices, equating to 21.1p per kWh of electricity and 7.5p per kWh of gas. This scheme was made available to all non-domestic energy customers in England, Scotland and Wales. A similar scheme has also been implemented in Northern Ireland however in March 2023 it came to an end in favour of some new policies announced by The Chancellor Jeremy Hunt in the Treasury’s 2023 Spring Statement.
Whilst for many it’s not possible to shop around for a new energy supplier at the moment, businesses can take steps to reduce the impact of price hike day by looking at their current phone, broadband and TV providers to find a better deal. Many customers stay with their supplier even once their initial contract has been completed as this is often the most convenient option, however this year’s price hike day is giving business customers even more reason to shop around and hopefully secure a better deal on their essential services.
Even business customers who are still in contract can shop around, although it’s worth noting that if you do change to a different supplier whilst in contract, you may be subject to penalties and early exit fees. However, sometimes paying these fees and swapping to a better deal can actually save you money in the long run, so it’s certainly worth considering especially with the rising cost of living.
By being savvy and shopping around, small businesses can make the most of market competition in order to secure the best deal after price hike day. As a business owner you might also wish to share this information with your employees as helping them to reduce the impact of the rising cost of living to their personal finances could also benefit your business by improving morale and by helping your team make their money last longer.
