Rising costs and weak spending 'squeezing' businesses
Aug 28 2008
Retailers are suffering under falling customer demand and rising costs, according to Capital Economics.
Jonathan Loynes, chief European economist from Capital Economics, comments that falling house prices, rising unemployment and a gloomy economic output are encouraging consumers to tighten their belts.
He explains that potential customers have less money to spend, something which will cause retailers to struggle.
Commodity price increases and rising energy costs are also hitting firms hard, with a lack of demand meaning they are unable to pass additional charges onto consumers, Loynes continues.
He adds that they 'are being squeezed from both sides at the moment; retailers are going to continue to struggle at least for the next year or so'.
Figures from the Office for National Statistics show the price of bread has risen by 15.9 per cent over the year to July.
In total, food inflation was found to stand at 13.7 per cent over the past year.
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