Majority of Scots firms to hike prices amid inflationary pressure, report finds

NEARLY 90 per cent of businesses in Scotland have declared they will increase prices by more than normal this year, while more than one-third expect to reduce their operations because of rising energy prices.

The latest Addleshaw Goddard Scottish Business Monitor, produced in partnership with the University of Strathclyde’s Fraser of Allander Institute, also found that more than half of businesses are finding it difficult to source goods and services amid the growing impact of inflationary pressures and supply-chain disruption.

However the report, published today and based on a survey of 500 firms in April, found that sentiment remained positive, with all sectors recording large and positive net balances of business volumes in the first quarter. This positivity is expected to continue over the next six months.

The survey found that the number of businesses expecting to reduce operations grew to more than one-third from one-fifth in the last three months of 2021.

Firms in the wholesale and retail and transport and storage sectors had the highest share of businesses expecting to reduce operations because of energy prices, at 48% and 47% respectively.

The most common concerns cited by firms were energy (91%), input prices (86%), the availability of inputs (81%) and finding new staff (81%), the survey found.

The transport and storage sector accounted for the biggest share of businesses reporting difficulties sourcing good and services, at 77%, followed by two in three firms in the accommodation and food services sector.

Every accommodation and food service provider surveyed said they expect to increase prices by higher than normal over the next year.

Mairi Spowage, director of the Fraser of Allander Institute, said: “Businesses continued to be optimistic in the first quarter of the year, despite increasing concerns over inflation and supply chain pressures.

“However, there has been an increase in the number of firms that expect to reduce operations this year due to higher energy bills, with businesses in the retail and transport sectors particularly impacted by the ongoing hikes in energy prices.

“Due to global supply chain issues, Scottish businesses are also finding it hard to source the goods and services that they need and firms are facing higher prices for their inputs.”