HIGHER inflation has many economic consequences, not least in the retail sphere, where business rates are tied to the Retail Price Index.
Not surprisingly, therefore, yesterday’s revelation that the figure now stands at 3.9 per cent causes grave concern to the body which represents the sector. The Scottish retail Consortium (SRC) says the associated hike will cost Scots retailers£22m, at a time when they are already struggling to make ends meet.
As our recent campaign on business rates highlighted, many firms are already struggling to cope with rates rises, and although the Scottish Government subsequently announced a welcome package of measures to assist particular sectors, this latest blow will hurt.
As the SRC points out, the picture for many high streets remains bleak, with one in 10 shops lying empty, on top of Government figures showing more than 16,000 jobs in the sector disappeared in the last eight years. Next year’s increase in the minimum wage, meanwhile, is likely to add to the pressure, especially for small businesses.
No doubt Finance Secretary Derek Mackay will want to consider all the consequences of higher inflation when he devises his next budget. As he is well aware, higher taxes can stifle growth even as they fund vital public services. Getting the right balance is not going to be easy.
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