High hotel prices cause inflation headache

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Have you booked a hotel room in the UK recently? If so, you might have thought the price seemed a bit high. And you wouldn’t be imagining it. Rapidly rising hotel prices are causing problems not just for travellers but for inflation and the wider British economy.

New data from the Office for National Statistics shows the inflation rate was 2 per cent in the 12 months to June, bang on the Bank of England’s target for the second consecutive month and well below the double-digit highs seen in late 2022.

But that headline figure is masking some challenges. While grocery inflation is decreasing and the price of items such as clothing and footwear are falling, services inflation remains high. In restaurants and hotels, inflation was at 6.3 per cent in the year to June, almost entirely caused by an 8.8 per cent increase in the price of hotels.