Firms must explain themselves in this winter of price hikes

The last time inflation was a hot-button political issue, Whitney Houston was top of the charts, the VCR was the must-have purchase, and a scandal-ridden Tory prime minister was clinging on desperately to power. Some things change, others less so. 

This marks trouble for business – in two ways. 

In the most obvious sense, prices are going to go up; producer price inflation is well into double figures on the year and it stands to reason that that will filter through into all sectors of the economy. That a pub boss is now warning the price of a well-deserved drink at the weekend will spike as a result of Putin’s gas gamble is the sign of an economy that is about to go through the wringer – and we are a lot more consumer-heavy now than we were in the early nineties. 

Mercifully the Bank of England is now independent and can, we hope, act without being minded to the political weather a few stops down the District Line. Inaction and complacency last year means that rates will need to go up, and sharply, this year if inflation is to be brought back down somewhere near target. Transitory has acquired new meanings in recent months but it will stretch credulity to describe several years as fitting into that category. 

But the second foot to fall for business as a result of runaway inflation is ensuring they come out of this period with their public reputation intact. BT’s decision to hike some of its broadband tariffs by more than inflation yesterday is unlikely to go down particularly well, for instance, especially with the rather imprecise explanation that it was customers’ fault for using their service too often.

Businesses that explain themselves well – like the City Pub Group – will fare better than those that are perceived, fairly or unfairly, to be making things worse for ordinary punters at the worst possible time. 

Read more; Terry Smith rounds again on Unilever and labels failed GSK bids a ‘near death experience’