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Kent firms planning to increase prices at highest level for seven years

The proportion of firms in Kent planning to increase prices is at its highest for nearly seven years.

Rising costs on imports have been blamed for 42% of businesses expecting to charge customers more for their products and services, according to the quarterly economic survey by Kent Invicta Chamber.

Meanwhile, the number of firms reporting improvements in their cashflow continued to hover around its lowest level for three and a half years in the first quarter of 2017.

Pressure on sterling has led to higher import costs, which is likely to be passed on to consumers
Pressure on sterling has led to higher import costs, which is likely to be passed on to consumers

The weakness of the pound, which has increased the price of foreign goods, meant 29% of companies said cashflow had worsened in the first three months of the year, up six points.

Only 26% said cashflow had improved, barely moving from 25% and 24% recorded in the previous two quarters.

A third of the survey’s 105 respondents said inflation was a greater concern than the previous three months, eclipsed only by worries over business rates, which affected nearly 40%.

Tarlochan Garcha, chief executive of peer-to-peer lender Kuflink, in Gravesend, said: “We are seeing renewed pressure on sterling which has resulted in higher import costs.

Kent has its highest level of companies planning to put up prices for seven years
Kent has its highest level of companies planning to put up prices for seven years

“There is also growing pressure from banks as they continue to tighten borrowing requirements.

“In the current climate, there is a rising number of people returning to their native countries within the EU and so companies are now having to hire UK staff at higher salaries.”

Neil Brooks-Johnson, Lloyds Bank relationship director for SME banking in north Kent, said: “Kent firms are facing an increase in wholesale import prices, largely driven by the weakening of the pound.

“In March, input costs rose at a faster rate than in London, which has been passed on to customers.

Cashflow has worsened for 29% of Kent companies surveyed
Cashflow has worsened for 29% of Kent companies surveyed

“Our latest Purchasing Managers’ Index for the region is showing that the weak pound continued to have an inflationary effect on materials cost, with businesses’ prices rising at the quickest rate since August 2008.

“On top of this, the rise in national living wage rates this month has placed more pressure on margins, pushing some businesses into raising prices.”

Stephen Rogers, managing director of Swanstaff Recruitment, in Dartford, added: “Most business see Brexit as an opportunity to increase prices, except business in the export market.”

The survey also showed more than a third of firms in Kent reported improved UK sales for the second straight month.

More than a third of firms reported improved domestic sales
More than a third of firms reported improved domestic sales

Only 15% said domestic revenues had decreased and half said they remained the same.

Meanwhile, forward orders across the UK appear to be strengthening.

Of the survey’s 105 respondents, 35% reported a growth in their order book, up 10 points on the last three months of 2016. This was mainly in the services sector.

However, international sales continued to slow down after the bounce following the EU referendum, when the falling value of the pound made UK goods cheaper for foreign buyers.

The proportion of firms with improved UK orders grew 10 points in the last quarter
The proportion of firms with improved UK orders grew 10 points in the last quarter
Growth in international sales is slowing down
Growth in international sales is slowing down
Growth in international orders has slowed
Growth in international orders has slowed

Only 17% said exports had increased in the first three months of the year, down seven points on the previous quarter, with 71% saying they remained the same.

International order books were exactly the same, with 17% expecting an increase, down four points.

However, manufacturers fared better than services, with 36% boosting orders against only 10% of services.

Luke Quilter, chief executive of digital agency Sleeping Giant Media in Folkestone, said: “I think the public were filled with uncertainty following the referendum.

Sleeping Giant Media chief executive Luke Quilter
Sleeping Giant Media chief executive Luke Quilter

“However, they have moved on and are getting back to their normal purchasing habits.

"Businesses are seeing that in their performance.

“In regards to international sales, the fluctuation in currency will be having a big impact on international sales.

“This balance will switch back and forth depending on how Brexit negotiations go and the deals that will be put on the table.”

Neil Brooks-Johnson, Lloyds Bank relationship director for SME banking in north Kent, said: “Events such as the referendum will naturally mean economic landscapes fluctuate but we are confident that firms in the region will go for growth abroad and continue to fly the flag for British goods and services.”

Neil Brooks-Johnson from Lloyds Bank
Neil Brooks-Johnson from Lloyds Bank

Two thirds of businesses in Kent expect turnover to improve over the next year, its highest level since the second quarter of 2015.

Three fifths of firms are also forecasting a hike in their profits in the same period.

This is also at its highest level since the second quarter of 2015.

Luke Quilter, chief executive of Sleeping Giant Media in Folkestone, said: “In order for a business to succeed it has to have a pragmatic but positive outlook on its future.

The amount of firms expected turnover to improve is at its highest level since the second quarter of 2015
The amount of firms expected turnover to improve is at its highest level since the second quarter of 2015
Profit expectations for the next year have improved
Profit expectations for the next year have improved

“Realistically businesses don’t really know how things are going to pan out as, ultimately, no one does.

“It is good to see that businesses are taking a positive view on things as that will help them deal with the challenges ahead.”

Tarlochan Garcha, chief executive of peer-to-peer lender Kuflink, in Gravesend, said:

“Overall the economy is buoyant which is fuelling confidence in the market and resulting in businesses growing and improving their turnover figures.”

Tarlochan Garcha from Kuflink
Tarlochan Garcha from Kuflink

Neil Brooks-Johnson, Lloyds Bank relationship director for SME banking in north Kent, said: “There are many ambitious businesses across Kent who are keen to invest in driving growth, which is where banks can help in providing the funding to help them do so.

“The economy and consumer spending are currently relatively strong, boosting business confidence and helping them to grow turnover.”


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