By Daniel Hunter
Steve Moore, Marketing Manager at Business Environment said he was not surprised to see the rise in inflation caused by the retail sector.
Official figures released today (Tuesday) revealed that the Consumer Prices Index (CPI) inflation rate rose to 2.9% in June, a rise largely caused by motor fuels, clothing and footwear.
"Most service-led business prices have remained static for five years, so it is not surprising to see that the increase in inflation is largely coming from the retail sector, as well as the price of fuel," said Moore.
"Despite fears that this will have a negative impact on the growth of the economy as we ease out of the recession, there could be further inflation rises.
"While price increases put pressure on consumers, impacting their spending power and ability to inject cash into the economy, it is unrealistic to expect businesses to keep prices low in the long-term. This does not mean, however, that businesses should hike up prices for solely financial gain — to remain competitive and stop sales trailing off, they must also ensure they are providing customers with better value for money by offering an improved service or better quality product.
"This means companies must invest money and time to ensure staff are trained to deliver higher quality customer service, and there is greater flexibility so that consumers can access services and products when and where they want to. We can already see evidence of this in the market, and Morrisons’ recent high-profile move into the online space is a perfect example, demonstrating how businesses can better cater for customers by listening to their needs.
"An increase in inflation can immediately appear as bad news for consumers and potentially the fragile UK economy — if consumers are less ready to part with cash, the economy will suffer. However, if price increases in any sector are accompanied by a clear improvement in service levels or product quality, consumers continue to benefit and will therefore be more willing to part with their cash. The danger arises when companies fail to take consumers into account and the price hikes become unjustifiable."
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