Prices for materials used by British factories are rising at the quickest pace on record in a sign firms may be pushed to keep passing on costs to consumers, official figures published today revealed.
The cost of buying components such as fuels used for the day to day running of manufacturing firms jumped 18.6 per cent over the last year in April, unchanged from March, but still at the highest rate since records began in the 1980s.
Rises in prices charged by factories for their final products is trailing input price inflation, meaning manufacturers face either swallowing thinner margins or hiking prices to protect profits.
Output prices – what producers charge customers at the factory gate – increased 14 per cent over the last year, also the quickest acceleration since 2008, the Office for National Statistics (ONS) said.
The figures indicate consumer inflation is likely to scale even higher in the coming months as businesses feed through higher costs.
Manufacturers’ products are used widely across the economy, meaning higher prices will ripple through the UK’s supply chain.
Separate data published by the ONS today revealed consumer price inflation is already running at a four decade high of nine per cent, propelled by the energy watchdog passing on higher wholesale energy prices by raising the cap on bills 54 per cent in April.
Food producers lifted prices nearly nine per cent over the last year, generating the largest contribution to overall producer price inflation at a shade over three percentage points.
That is the highest annual food inflation since September 2011 and was “mainly driven by preserved meat and meat products for domestic market,” the ONS said.
A prolonged conflict in Ukraine will send global food prices soaring due to wheat and sunflower oil supplies being unable to leave the country, experts have warned.
This week, Bank of England governor Andrew Bailey apologised for sounding “apocalyptic” on looming food inflation.
A reduction in crude oil prices held back producers’ input inflation.
“Crude oil had the largest downward contribution to the change in the annual rate, at 1.26 percentage points,” the ONS said.
However, higher gas prices drove overall input prices higher.
Gas prices have soared over the last year or so, driven by a resurgence in demand caused by countries emerging from Covid-19 and Russia’s invasion of Ukraine.