Bailey’s price advice ‘catastrophic’ for pubs, warns Wetherspoon boss Tim Martin
The boss of Wetherspoon has warned that Andrew Bailey’s call for businesses to exercise caution over raising prices would be “catastrophic” for pubs if taken literally.
Tim Martin, founder and chairman of the pub chain, said the calls from the Bank of England Governor were unrealistic at a time when hospitality companies were being ravaged by “ferocious” levels of inflation.
Bank of England governor Andrew Bailey said on Friday that businesses should be cautious of continuing to raise prices because it could fuel further inflation, in turn forcing policymakers to push up interest rates further.
Mr Bailey told BBC Radio 4’s Today programme: “When companies set prices I understand they have to reflect the costs that they face.
“But when they are setting prices in the economy we do expect inflation to come down this year and I would say please bear that in mind.
“I would say to people who are setting prices: please understand if we get inflation embedded, interest rates will have to go up further and higher inflation really benefits nobody.
“It hurts people, and it particularly hurts the least well-off in society.”
Mr Martin, founder and chairman of the pub chain said: “What he’s (Mr Bailey) said is understandable – linking pricing restraint to lower inflation is a fact of life. Like the headmaster saying do your homework.
“But with input costs so high it may not be realistic…if publicans have high input costs they won’t be able to take a literal approach to the Governor’s words.”
Kate Nicholls, chief executive of trade body UKHospitality, said companies had no choice but to reluctantly raise prices.
She said: “To suggest that the sector should stomach these staggering cost increases ignores the real and stark situation facing venues across the country. It is simply impossible if we want to have a viable hospitality sector left in a year’s time.”
The Federation for Small Businesses (FSB) also hit out at Bailey’s remarks.
Tina McKenzie of the FSB said: “Small firms have already cut their costs to the bone, reduced their product ranges or opening hours, and looked for cheaper viable alternatives to everything from concrete to coffee beans.
“Margins are thin, rising interest rates are hitting the bottom line, and with the prospect of energy bills leaping back up on 1 April, in many cases they have no choice but to look at hiking their prices to cope, something that most are very reluctant to do."
Mr Martin’s comments came as JD Wetherspoon said it returned to profit in the six months to February. It posted a profit of £4.6m compared with a £26.1m loss a year earlier. However, profits were still 90pc lower than in 2019.
Sales rose 5pc during the period compared with pre-pandemic levels and by 13pc a year ago.
Shares in the company jumped 13.5pc to 659.5p.
The company has been heavily exposed to surging costs for energy, food and labour, which have hit the wider pub and restaurant industry particularly hard.
He said: “Inflationary pressures in the pub industry, as many companies have said, have been ferocious, particularly in respect of energy, food and labour.
“The Bank of England, and other authorities, believe that inflation is on the wane, which will certainly be of great benefit, if correct.”