Today saw the publication of the latest Retail Price Inflation (RPI) figures, which revealed that inflation continued to rise in August to 3.9 per cent. September’s RPI inflation rate, to be published next month, will be used to determine the uplift in business rates next April.
Given that the rate of inflation has already accelerated to 3.9 per cent from two per cent in September 2016, this coming September’s RPI is likely to be at least four per cent. This will push up already onerous business rates bills for retailers across the country- who account for a quarter of all rates paid - by £280 million next April.
Commenting on the significance of the likely spike in business rates bills, Sara Jones, Head of the Welsh Retail Consortium, said:
"Today’s figures point towards even more challenging times ahead for the Welsh retail industry. Recent years have seen business rates rise, employment costs go up, and the cost of importing goods increase as the value of the pound has crashed. This perfect storm of economic and government induced cost increases will make it more and more difficult for retailers to keep reducing prices, it is only a matter of time until customers start to feel this pressure through higher prices. That could be very hard on consumers at a time when real wages are remaining stagnant.
"The Welsh Government should look to utilise the legislative levers at its disposal to move indexation of business rates from RPI to CPI. Longer term we should be looking at a more fundamental reform of the rates system for business of all size to create an environment which allows the industry to grow and to invest."