Inflation dips below 10% as petrol prices ease but pay reduction nears 3%

Falling fuel prices saw the rate of inflation dip 0.2% to 9.9% in August. But rising food costs still make the headline number close to a 40-year high.

Smaller upward effects came from price rises for food and non-alcoholic drinks, miscellaneous goods and services, as well as clothing and footwear according to the Office for National Statistics.

Scottish Friendly savings specialist Kevin Brown noted workers are facing the “biggest wage squeeze for more than 20 years”.

He added: “Adjusted for inflation, growth in real pay fell by 2.8% in the three months to July, which is just shy of the record 3% drop reported last month.

“Only by factoring in inflation do we get a true sense of how workers’ incomes are holding up as living costs continue to rise.

“The hope is the government’s energy plan will help to fix costs and start to bring inflation under control. That will ease the pressure on workers’ pay packets and allow them a little more breathing space each month.”

Yvonne and Mike Crook have been directors of event and outside caterer Good Highland Food since 2003.

The business based at Moy near Inverness faces rising costs across the supply chain, from food and drink to fuel, energy and staff, meaning some increases have had to be passed on to customers.

Ms Crook said: “We are trying to balance investment opportunities in the business versus huge increases in costs – it has been very challenging making the right decisions.

“Our supplier relationship is critical to the success of Good Highland Food. The brand has been built firmly on the use of local produce and local stories, and so we are most concerned for their survival.”

Ms Crook added it was important to ensure guests had an “increasingly better experience” where they felt they were seeing good value for their money, while it was also key to work with other Highland companies to improve the visitor experience.

She also noted a hospitality academy had been discussed for the Highlands for “almost 30 years”, adding: “If we have a world-class tourism product, we should aspire to developing a world-class hospitality academy.

“It would change the way the industry is viewed in the Highlands and could attract international students to study within such a unique natural environment.”

Hospitality firms often have to increase staff pay to retain employees and Good Food Highland is no exception, with the result it does not have an issue recruiting workers.

Ms Crook, also chairwoman of Highland Tourism, said: “We have increased staff wages and aim to again early next year but we can only continue to do that if we work as a community to raise the value of a guest/ visitor experience to the Highlands and attract more high-end visitors.

“Reduced VAT and/or business rates would certainly help and there is also an opportunity for the public sector to work in partnership with community leaders to be part of strategic solutions.

“As an example, Good Highland Food is a small business but invested heavily in the establishment of Highland Tourism as a community interest company some 18 months ago.

“Precious time is slipping by, whilst the public sector considers how we can work together – the business and wider community need help now.

“Highlands and Islands Enterprise (HIE) and Highland Council’s support as well as a range of other local government agencies in establishing the Highlands as a premium environmental brand will provide a basis where all businesses and communities attract higher-value visitors that are willing to pay higher prices.

“This is not an exclusive strategy – this is the most significant opportunity we collectively have with a world-class country sports, golf and adventure product in a world-class natural environment, and will provide the single biggest opportunity for businesses to mitigate risk as they aim for survival in the coming years.”

ECONOMIC CHALLENGES: Yvonne and Mike Crook of Good Highland Food.