UK manufacturing price pressures highest since 1976, says CBI
The largest number of British manufacturers plan to raise prices in the next three months than at any point since 1976, according to a business survey that underscores the inflationary pressures hitting the UK economy.
With energy prices rocketing and wages on an upward path, the CBI said four-fifths of firms expect to increase the cost of manufactured goods in the next three months.
Not since the oil shocks of the mid-1970s has such a broad swathe of the manufacturing sector found itself needing to increase prices, pushing a net balance to +77% of firms that say prices will need to rise, up from +66% in January, according to the business lobby group.
Order books remained strong in February as the global demand for manufactured goods remained healthy.
By some measures the global demand for goods has increased 20% on pre-pandemic levels during the pandemic, putting upward pressure on the cost of raw materials and the price of energy on international markets.
The survey showed a net balance of +20% of factories reporting rising orders, down from +24% in January. While this was the weakest reading for four months, the CBI said it was still well above the survey’s long-run average.
The CBI deputy chief economist, Anna Leach, said: “Manufacturers will be buoyed up by strong order books and output growth, but amid ongoing cost pressures, almost four in five firms expect to increase prices in the next three months.”
She urged Sunak to use his spring budget statement, due next month, to increase investment incentives to help manufacturers.
The official annual rate of consumer price inflation rose to 5.5% in January, the highest since March 1992, while the retail prices index, which is used as the benchmark in most pay negotiations,
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