Furniture retailers in the UK are being warned to expect price hikes from suppliers, as manufacturers indicate that mid-single-digit increases will be necessary to cover rising costs. These price hikes are a direct result of new tax increases outlined in the government's recent Budget, which introduced higher taxes on medium and large businesses.
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A finance director at one of the UK's largest furniture manufacturers stated that a minimum 4% price increase will be required for all products manufactured from April 2025 onward to maintain current profitability. The manufacturer also revealed that changes to the minimum wage and national insurance contributions will add significant costs per employee. Specifically, the company expects an additional £1.56k in wage-related costs and £1.02k in national insurance costs per employee, amounting to £1.3 million annually for their current workforce. These figures were shared under the condition of anonymity.
The situation is not unique to one company, with other furniture and flooring suppliers reporting similar cost increases. This has raised concerns about the potential for renewed inflationary pressure in the industry, as businesses struggle to offset rising operational expenses.
While double-digit inflation in both the furniture and flooring sectors had subsided in recent months, retail prices have remained deflationary throughout 2024, in part due to heavy discounting as retailers attempt to boost sluggish consumer demand. This dynamic, combined with the new tax burdens and higher production costs, could lead to a challenging period for furniture retailers and suppliers alike, with the threat of future price increases impacting the market.
Source: www.thefurnishingreport.com