Impact of Inflation on SMEs and UK Tourism Industry

Foundation Year
Research Project

Table of Contents
INTRODUCTION...........................................................................................................................3
Concept of inflation.....................................................................................................................3
List of the events that can lead to inflation.................................................................................3
Aim and objective of research.....................................................................................................3
MAIN BODY...................................................................................................................................4
Impact of inflation on SMEs.......................................................................................................4
Positive and negative impact of inflation within UK tourism industry......................................5
CONCLUSION AND RECOMMENDATION...............................................................................6
Conclusion...................................................................................................................................6
Recommendation.........................................................................................................................6
REFERENCES................................................................................................................................8
APPENDEX.....................................................................................................................................9

INTRODUCTION
Concept of inflation
Inflation refers to process where prices of products or services within an economy gets
increased at a certain time period. Inflation can be occurred due to various reasons such as
demand is higher than supply and prices of products or services are inflated to control the
demand. Price is an important factor to a common man and they sensitively gets influenced when
inflation happen (Agénor and da Silva, 2019). They tend to avoid consumption of particular
product or services which price is higher than normal. Another cause for inflation is that if the
production costs increases such as cost of raw materials, wages and salaries of labor etc. then it
also rise the prises of finished products to cover cost along with maintaining revenue for the
business.
List of the events that can lead to inflation
At the time of inflation, the buyer power of customers decreases as they stop buying
normal products and they become more focused towards healthcare facilities while securing their
money for future utilisation. Also, people only concentrate to spend their money on necessary
items on which their live relies (Szafranek, 2019). There are different events that can lead to
inflation. One of events is global event. When other nations rises their prices of raw products or
improves the export or import charges then obviously many other countries will also get
impacted. For instance, a UK established organisation importing its raw goods from other
countries such as Russia. Suppose if the Russia rises its raw material prices then UK organisation
need to increase their prices simultaneously in order to cover up their costs and profit margin
(Auer, Levchenko and Sauré, 2019). Moreover, the rate of interests also plays an essential role in
leading inflation in an economy. When the rate of interest is decline then citizen tend to rise their
borrowings from banks and invest more in the marketplace. Therefore, when money is more
circulated in the market then government of that country rise the prices of products and services
to control such circulation in the market.
Aim and objective of research
Aim: To analyse both positive and negative impact of inflation within UK tourism industry
along with identifying solutions to reduce the negative impact of inflation.
Objectives: