Pub & restaurant bosses slam Rachel Reeves' tax hikes for sending inflation rate soaring by more than expected

The Sun

21-05-2025

PUBS and restaurant bosses angrily hit out at the higher-than-expected inflation figures - blasting a slew of government taxes and regulation for higher prices for consumers.
Hospitality chiefs aimed their fire at decisions to raise national insurance costs for firms and called for lower business rates for the suffering sector.
The call came as inflation shot up to 3.5 per cent in the year to April which was a steep rise on the month before when it stood at 2.6 per cent.
Kate Nicholls, UK Hospitality boss also hit out at a new packaging tax, known as the "bevvy levy" for also hitting consumers in the pocket.
She said: "Political and tax decisions have consequences for consumer prices - we need downward pressure on regulation and costs of doing business with action on business rates, NICs, packaging and tourism taxes."
Union boss Sharon Graham said the cost and living crisis is "alive and kicking".
She added that growth and profit must turn into jobs and wages.
Tory shadow Chancellor Mel Stride said that the news was "worrying for families" who are seeing prices spiral.
Why does inflation matter?
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we're earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.
He said: "This morning's news that inflation is up – and now well above the 2% target – is worrying for families.
"We left Labour with inflation bang on target, but Labour's economic mismanagement is pushing up the cost of living for families - on top of the £3,500 hit to households from the Chancellor's damaging Jobs Tax.
"Higher inflation could also mean interest rates stay higher for longer, hitting family finances hard.
"Families are paying the price for the Labour Chancellor's choices.'
Richard Tice, deputy Reform UK leader, said: "Terrible inflation numbers soaring to 3.5% Due to Labour's awful budget and economic mismanagement."
Ms Reeves said: "I am disappointed with these figures because I know cost of living pressures are still weighing down on working people.
"We are long way from the double digit inflation we saw under the previous administration, but I'm determined that we go further and faster to put more money in people's pockets.
"That's why we have increased the minimum wage for millions of working people, frozen fuel duty to protect commuters and struck three trade deals in the past two weeks that will go towards cutting bills."
What does it mean for my money?
Rising inflation reduces people's spending power because things cost more.
Core inflation, which excludes volatile items, also increased, driven mainly by higher household bills like energy and water.
Businesses are passing on increased employment costs to consumers, contributing to inflation.
Rising inflation means prices will rise faster, pushing up grocery and household bills.
The Bank of England may keep interest rates higher for longer to control inflation, which could mean that mortgage rates will rise again.
Rob Wood, at Pantheon Macroeconomics, said he believes inflation will stay around 3.5% for the rest of the year.
He said: "We think the Monetary Policy Committee will have to proceed cautiously.
"We stick with two more rate cuts this year, but are very close to reducing that to only one."
However, this isn't guaranteed.
If economic growth remains slow, the Bank could continue to lower interest rates to encourage spending and investment, helping to give the economy a much-needed boost.
The base rate is currently set at 4.25%, and the Bank of England's Monetary Policy Committee will next review its level on June 19.
Wage growth is slowing, and job insecurity is rising and this puts more pressure on personal budgets.
While energy bills may fall in the summer, many households are still struggling.
It's important to review budgets, cut wasteful spending, and manage debt.
Homeowners and first-time buyers may be discouraged as interest rate cuts could slow down.
Savers need to be aware that higher inflation reduces the value of their returns.
It's important to secure good savings deals now and consider tax-efficient savings strategies like ISAs to protect savings from tax.
Myron Jobson, senior personal finance analyst at interactive investor, said: "While the increase might come as a shock to households, it's important to remember that CPI inflation is an annual measure, comparing prices to what they were a year ago.
"Britons should approach headline inflation figures with perspective. Everyone has an inflation rate that is unique to them, depending on their individual spending habits.
"It's crucial to focus on maintaining financial resilience in uncertain times – whether by reviewing budgets, building up emergency savings, or managing debt – to better weather any bumps along the road ahead."