Inflation drops but businesses in Rugby are making tough choices

Lac Hincu says she has had to make some tough decisions to keep the business afloat

The owner of a bakery in Warwickshire said despite its popularity with customers she had been forced to downsize to survive in the current cost-of-living crisis.

Lac Hincu, who runs The Revel Bakery in Rugby, said she cut eight out of 10 staff last year.

After a peak of 11.1% in October, latest figures show inflation is slowing.

However, many small businesses said trading conditions remained tough.

"I had to let go of all of my staff, some I was really attached to... it was heart-wrenching," Ms Hincu said.

"In hindsight I'm glad I made those decisions but... at the time you can't help but feeling like you're failing because you have to change the whole model of the business."

Vinay Kalia said he has to make sure all appliances are switched off

At Kanko Coffee Shop, business may be good, but margins are tight.

The cafe, which opened at the end of the Covid pandemic, has struggled with energy costs.

"I think the hardest thing for a business like mine has been energy costs, just simple things like making sure appliances are switched off, not using the air con, these are things I never had to worry about in the past," owner Vinay Kalia said.

Steve Waters at Birmingham Wholesale Market said prices are double what they were last year

Stall owners at Birmingham's Wholesale Market, said their priority was to "just survive".

Steve Waters, from J Vickerstaff & Co, said: "Prices are two times higher than they were at the end of last year.

"So you're talking tens of thousands of pounds extra we've got to find, just to stand still really as a business."

Mr Waters added his energy bills remained stubbornly high.

"We are hoping that come the autumn things will start to come down, but certainly at the moment no, it's pretty tough in that respect," he said.

Wednesday's figures showed inflation fell to 6.8% in the year to July, down from 7.9% in June, but it still remains high compared with historical rates and much higher than the Bank of England's 2% target.

When the rate of inflation falls, it does not mean that prices are coming down, but that they are rising less quickly.