Cost of living: Welsh cake firm hit by £43k butter bill

A company making Welsh cakes said it is spending an extra £15,000 a year on butter due to the cost of living crisis.

Owner Jo Roberts said the key ingredient had increased in price 48% since December.

But Ms Roberts said she had not increased her prices, as she feared people would stop buying the treats due to rising food and energy costs.

It comes as the UK inflation rate reached 9.4% in the year to June.

The Fabulous Welshcakes company employs 20 people at two shops in Cardiff, and in a production plant in Barry, Vale of Glamorgan.

Ms Roberts, who started the business 15 years ago, said she had not raised the price of an over-the-counter Welsh cake in more than five years.

But due to the cost increase, she is expecting to spend £43,000 on butter this year.

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"We can't keep bearing the brunt and not pass it on to the customer," Ms Roberts told BBC Radio Wales Breakfast.

"But to be honest it's just not a good business decision to raise prices in the middle of a cost of living crisis."

Jo Roberts started her Welsh cake business in 2007

"Welsh cakes are an extra, you don't need them," Ms Roberts explained, adding that she was worried if she puts the prices up people will say they can "manage without those".

She said she felt it would be "wrong" to put prices up for people who have supported her business during the pandemic.

"So I've kept the prices static... that's my way really of thanking customers."

She said many businesses in Wales were facing the same dilemma, feeling a "little bit trapped between seeing profits decreasing quite rapidly, but not being able to pass anything on".

The cost of butter has risen by 48% since December

As well as her bakery shops, Ms Roberts sells corporate gifts, and to hotels and bridal customers.

She said she had been forced to increase the price of some packaged items because of other costs.

"It's really difficult to manage when your costs are going up.... petrol's increasing, electricity's increasing," she said. "So as well as that we've got our packaging price increasing."

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But instead of raising prices across the board, Ms Roberts said she had cut back on expenses.

"I'm probably investing a little bit less," she said. "There's a couple of new bits of equipment I could do with buying, but I can't really get them."

She said she was most worried about an increase in corporation tax from the current 19% to 25% next April.

"I think that's an area where the [UK] government could help business, especially small businesses like myself," she said. "It's just another squeeze on the profits, on my bottom line."

Making less money "doesn't encourage entrepreneurs to start businesses if the reward is not there," she said.

The UK government said only companies with profits of more than £250,000 will face the increase in corporation tax to 25% next April.