If ever there was a time for a firm to bring in profit consultants, now is it. While the figures for economic growth may be strong at present, some significant tailwinds are set to take their toll.

The key issue that firms must consider is that of inflation, currently at 6.2 per cent (March 2022) but expected to rise further before it falls.

At first glance, it might seem that higher prices will mean more profits for those charging them. But increasing what you charge only raises incomings. It does not alter the fact that your costs may be greater too.

Companies may face three significant cost pressures that raise their outgoings. Firstly, the price of various wholesale goods and raw materials is a significant issue for many firms. The most obvious case in point is that of wholesale gas, which has pushed up energy prices over the winter and is set to do so even more now that  the energy price cap has been raised. .

A second factor may be wage demands. Increases in the cost of living may prompt workers to push for higher salaries, but by pumping more money into the economy, this might further fuel inflation, as well as raising payroll costs for companies.

The governor of the Bank of England, Andrew Bailey, has expressed this very concern, although he has come under fire for urging restraint from workers while pocketing £575,000 a year.

A third factor is one that Mr Bailey and his colleagues on the Monetary Policy Committee do control – interest rates. The second successive increase in the base rate still only leaves it at 0.5 per cent, which is extremely low by pre-2009 historical standards, but there may be more to come and this can mean lenders pass on the rise, meaning borrowing will be costlier to finance.

Simply passing on higher costs to customers may be risky, however, as this could price out people whose budgets are under strain. This is why it is wise to seek expert advice on how to maintain profits and set your firm on a positive long-term course that will ride out varying economic circumstances.