UK factories set to hike prices

 
Julian Harris
Follow Julian
CONSUMERS can expect price hikes from UK factory products in the coming months, as manufacturers look to pass on steep and rising costs.

Yet despite inflationary products and weak domestic demand, the industry is upbeat about its current situation, a survey from the Confederation for British Industry (CBI) revealed yesterday.

Nearly a third (31 per cent) of manufacturers expect to raise output prices over the next three months, it said.

“Inflationary pressures remain acute,” said CBI chief economist Ian McCafferty. “High commodity prices and import costs mean firms still expect to raise factory gate prices markedly over the next three months.”

A positive balance of 27 per cent of manufacturers expect prices to rise, up from 24 per cent in May’s survey and well above the long-run average of a one per cent balance.

Overall business, measured by total order books, climbed out of negative territory for only the second time this year in the survey. A positive balance of one per cent reported “above normal” orders, considerably higher than the long-term average of -18 per cent.

The result were partly driven by strong exports, which recorded an even balance, with 27 per cent saying overseas orders were above normal and 27 per cent reporting below normal exports – a monthly improvement, and above the long-run average of -21 per cent.

Expectations for the coming three months moderated slightly. “Much of this appears to be due to the temporary supply chain disruptions following the tsunami in Japan,” McCafferty added.