British factories are preparing to launch a rapid cycle of price rises to offset a cost onslaught, reveals a closely watched survey released today.
The fresh print adds to agitation at the Bank of England over inflation becoming entrenched in the UK economy as a result of businesses baking in soaring costs to their pricing plans.
The proportion of British factories intending to hike prices over the next three months climbed to its highest level since 1977, according to the Confederation of British Industry (CBI), the UK’s chief business group.
“Global supply chain challenges are continuing to impact UK firms, with our survey showing intense and escalating cost and price pressures,” Rain Newton-Smith, chief economist at the CBI, warned.
A global supply crunch triggered by a sudden resurgence in demand has left supply chains wilting and struggling to produce enough materials to fulfill swelling orders.
A scarcity of inputs has prompted businesses to bid up prices in an attempt to outcompete rivals, raising production costs sharply.
Costs accelerated at the quickest pace since April 1980, the CBI said.
Strengthening price intentions among factories fuels fears that UK inflation will trend higher in the coming months, piling pressure on the Bank to hoist interest rates for the second time in as many months at its next meeting on 3 February.
The cost of living in Britain is running at its hottest level since March 1992, hitting 5.4 per cent in December, according to the Office for National Statistics.