Shoppers could be hit by even higher prices when the business energy bill support program expires in April, the retail association has warned.
Shopkeepers have tried not to pass on record price hikes to shoppers but may have no choice as bills will rise without future help, it said.
The government fixed wholesale gas and electricity prices for businesses for six months between October and March.
The Treasury said the scheme was under review because it was “very expensive”.
The BBC understands Chancellor Jeremy Hunt will meet business groups on Wednesday lunchtime to brief them on the government’s plans to support energy bills once the current package expires.
A £400 rebate for all household energy bills is also due to end by April and charities have urged the Government to do more to protect the most vulnerable.
- Decision on utility bill support for businesses postponed
This year looks set to be another difficult one for consumers and businesses as “inflation shows no immediate signs of abating,” said Helen Dickinson, chief executive of the British Retail Consortium (BRC).
The BRC examines the price development of 500 everyday items every month.
The latest survey showed that headline food inflation hit 13.3% in December, up from 12.4% in November.
This is the highest rate of food inflation on record. The reason for this is the high cost of animal feed, fertilizer and energy due to the war in Ukraine, the BRC said.
Prices of non-food items fell as retailers offered big discounts for shifting inventory, she added.
- Why are prices rising so much?
Ms Dickson said retailers would continue to work hard to support their customers and keep prices down.
But this “may no longer be sustainable” as without the government’s energy support scheme retailers could see their bills rise by £7.5bn overall, she said.
“The government urgently needs to provide clarity on what future support might look like, otherwise consumers may pay the price,” she said.
The Federation of Small Businesses (FSB), UK Hospitality, the CBI and the British Chambers of Commerce are expected to attend a meeting with the Chancellor on Wednesday.
The FSB said small businesses “cannot plan their 2023 without assurances”.
According to Mike Watkins, NielsenIQ’s head of retailer and business insight, rising grocery and energy prices coupled with the arrival of holiday bills mean shoppers will have less to spend on non-essential items in January.
Meanwhile, UK Hospitality said it was “vital that this support is extended” and warned that without it the industry “faces a steep cliff in April”.
Martin Greenhow is Managing Director of Voodoo Doll, which runs five cocktail bars called Mojo in the north of England.
He said his temporary energy contract for one of the bars expires in March at the same time as the utility bill support program.
When another of his buildings came up for an energy tariff upgrade last year, the bills more than doubled, even with government financial help.
“We were looking at £17,000 a month,” he said. “Well, that’s totally unsustainable for any company. If we had those kind of margins I wouldn’t be here now, I would be on a yacht in Monaco.”
He said businesses need to know “months ago” and “long term” if this support for energy bills will continue.
A Treasury Department spokesman said its review aims to reduce public finances’ exposure to volatile international energy prices from April 2023 onwards.
“We will announce the outcome of this review in the new year to ensure companies have sufficient certainty about future support before the current program ends in March 2023,” they said.
New research shows the number of store closures in the UK rose sharply in 2022.
More than 17,000 locations have closed shop — the highest number in five years, according to the Center for Retail Research (CRR). Overall closures are nearly 50% higher than in 2021, it said.
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