Hospitality businesses have been the hardest hit by cost increases of all sectors, with 43% reporting lower turnover in August compared to July – a net decrease of 26%.
This is according to the Office for National Statistics, which found that 67.8% of businesses reported an increase in the prices of goods or services bought – the highest proportion of any sector – while 30.2% reported an increase in their own prices.
More than half (55%) of businesses in the accommodation and food service activities industry said they expected their turnover to decrease in October, particularly restaurants, pubs and bars.
More than a quarter (29%) of trading businesses across all sectors expected the prices of the goods or services they sell to increase in October 2022, with energy prices (46%) the most commonly reported reason for considering doing so. However, earlier this week the government set out its plan to introduce a cap on businesses' energy bills this winter.
Meanwhile, the Bank of England has increased interest rates from 1.75% to 2.25%, which takes borrowing costs to their highest level since 2008, which UKHospitality said stressed the "acute need for further support" for the industry.
The Bank of England's monetary policy committee also predicted that the UK economy is now in recession, as GDP had fallen by 0.1% between July and September.
Chancellor Kwasi Kwarteng is due to announce a ‘mini budget' later today that will likely focus on tax cuts and measures to boost the economy. The reversal of the rise in National Insurance has already been confirmed.