Since last year the Retail Prices Index (RPI) has almost doubled, from 2% in September 2016 to 3.9% in September 2017, on figures released by the government on 17th October.
The RPI is an index that shows the changes in the cost of living throughout the UK and each year business rates are adjusted using the index to generate the Uniform Business Rates Multiplier, which helps determine how much businesses pay.
Graham Isle, partner in our business rates team commented on the announcement, “The announcement earlier this month will be a very unwelcome one for many businesses that are already facing a number of increasing financial pressures.
“It is estimated that the increase of 3.9% could cause business rates bills to increase by over £1.1billion next year, with the retail sector alone facing increases of over £300million.
“This only adds further pressure to the government to bring forward the change of measuring the multiplier using the lower rate of the Consumer Price Index, a change which has been promised to happen in 2020.”
It was also announced today that for the first time in over five years the UK inflation rate reached 3%, up from 2.9% in August.
The rise in the inflation rate to its highest level since April 2012 has been caused by an increase in food and transport prices and a fall in the value of the pound, causing the cost of imported goods to increase.