It comes amid a “glimmer of hope” that the Government strategy to restore the ailing economy is having an effect, a business expert said. Inflation is now at 10.5 percent, compared with 10.7 percent last November.
That, along with a drop in the wholesale price of gas last week has provided the first optimism for months for struggling families and businesses.
But retail and hospitality leaders warn that the next four or five months will still be very tough.
This is mainly due to planned rail strikes at the start of February and energy prices set to rise in April when Government support is cut.
Latest figures showed almost 5,000 restaurants and nightclubs closed for good last year, with three-quarters failing in the last six months as energy bills and cost inflation soared.
UKHospitality CEO Kate Nicholls, inset, said: “There are the first signs that the Government’s plan is starting to have an effect and that we have got a grip on the crisis.
“You can see how it will start to improve, but sitting alongside that we have the latest figures showing the number of businesses that closed last year.
“Although the economy is starting to turn a corner and we are starting to see the first glimmer of hope, for many businesses the worst is probably still to come.
“In April we have energy support reducing, the National Living Wage bringing wage rate inflation, and business rates changing too.
“It will be the second half of this year before things really start to improve for the hospitality sector.”
Andrew Goodacre, CEO of the British Independent Retailers Association, agreed that the first half of this year will be challenging for high streets nationwide.
However, he said that there is hope for a better end to 2023.
He added: “We now have confirmation that December and the festive period was disappointing for retailers. There seems to be widespread acceptance that inflation will fall this year with the costs of energy falling and so the Government must use its spring statement in March to announce ways of boosting the economy.”
“Everyone on the high street expects the first four or five months of 2023 to be really challenging.
“But we are hopeful they can look forward to a much stronger end of the year as the economy returns to normal, and customer behaviour returns to normal as well.”
Alex Veitch, director of policy and public affairs at the British Chambers of Commerce, said: “Wholesale energy prices have now fallen to levels from before the Ukraine war, so it is imperative that suppliers pass these savings through to their customers.
“The scaling back of Government support on energy costs means that firms will look to the spring Budget for concrete action to create a much more stable environment to invest in, focusing on infrastructure, skills, trade and green tech.”