As expected, inflation in the UK continues to rise. In March, inflation rose to a 30-year high of 7%, up from 6.2% in February. Crucially, this still doesn’t take into full account the invasion of Ukraine by Russia and the energy price cap rise which came into force at the beginning of April.
Therefore, inflation is expected to continue to rise in the coming months.
Double-digit inflation
For context, 7% was the previous topping out mark predicted by the Bank of England, and we got there a lot faster than they thought we would have done. Frankly, they have done such a poor job in predicting what is to come that it has become a bit of a joke now.
Inflation is now expected to peak somewhere between 10-12%. If so, that would be the highest level since the inflation crisis of the mid-70s. The cost of gas, electricity, fuel, food, wages, National Insurance and much more are rising at the fastest pace in decades.
What is becoming frustrating is that the war in Ukraine is now being squarely blamed for the variety of problems much of the world is going through right now. This was to be expected as politicians do like a scapegoat. But remember that the war in Ukraine has been going on for six or seven weeks. Inflation has been a growing problem since the start of 2021. We must remember that when politicians trot out the war as the excuse to blame everything on.
With utilities and fuel rising so steeply, this is having an effect on the price of everything, including products in the UK fenestration sector. The glass energy surcharge has gone up again to 17p from Pilkington. New rounds of price increases from systems companies and fabricators are also stating that the cost of energy as well as raw materials as the causes for the latest increases.
And here is going to be the problem for the coming months. Even if raw material costs become more stable, the cost to produce them continues to rise. It takes a lot of gas and electricity to make gas and PVCu/aluminium profiles. Businesses are not protected by any caps. You only need to look back at the story of Pilkington’s energy costs rising from £1m per month to £8m per month. That was back in January. There have been further increases since. The industry has to expect further price increases in the coming months and they’re sadly going to have to be passed down to the end-users. In our case, the homeowners.
Being proactive
Unlike the pandemic, which was a crisis of uncertainty, we know what we’re dealing with when it comes to inflation and the cost of living. We know prices are going up. We know they’re going to continue to go up. We know that many families are going to have to cut back on spending, including rethinking their plans on big-ticket items such as new windows and doors.
So, because we know what the problems are, we can better plan and prepare to tackle them. For example, the rising cost of energy provides the fenestration sector with an ideal marketing message. We know our products save significant amounts on heat loss. Therefore that provides us with a very strong argument to go to the public with. We are going to have to compete with many other sectors now when it comes to the allocation of spending by homeowners. But few have such a timely and attention-grabbing USP as saving energy as we do. We need to use that to our advantage and continue to extol the virtues of investing in home improvements to make sure that when next Winter comes along, people are keeping their houses as cheap to run as possible.
Marketing activities also have to be stepped up. The worst thing our industry can do now is become less visible, both internally and to the general public. Marketing is the one avenue, other than word of mouth and recommendations that keeps our sector visible and active. We have to be increasing it now to ensure that the positive impacts are felt weeks and months down the line.
It is also time for installers to reevaluate which demographics to aim at. Offering budget options right now seems futile considering the rate at which even our most basic products have been rising in price. I have written previously about how our family-run installations business is being very deliberate in targeting the wealthier bracket of people, and that it’s paying dividends. Now would be a good time to look at your product portfolios and decide whether it is time to change approach.
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