LONDON (Reuters) – The number of British manufacturers raising prices has hit its highest in at least two decades, according to a survey published on Monday as the Bank of England considers whether to head off inflation pressure with an interest rate hike this week.
Trade body Make UK and accountants BDO said a net balance of 52% of manufacturers had increased their prices in the final three months of the year, up from 50% three months earlier and the fourth quarterly rise in a row.
It was the highest reading since the survey began asking questions about prices in 2000, pushed up in large part by global supply chain problems since the COVID-19 pandemic, and the share was likely to rise further to 58% in early 2022.
Domestic market orders outpaced export orders but demand for both was slowing, the survey showed.
Make UK said it remained positive about manufacturing output growth for next quarter but lowered its forecast for 2021 from 7.1% to 6.9% and predicted growth of 3.3% in 2022.
“While manufacturers will be able to enjoy some festive cheer this year, their spirits will be tempered by the eye-watering impact of escalating cost pressures,” James Brougham, senior economist at Make UK, said.
“Given the global nature of some of these pressures there is little sign that they will abate anytime soon. However, they will hope as we enter a fresh year that these will gradually unwind,” he said.
Richard Austin, head of manufacturing at BDO, said orders and output remained very positive compared to historical levels but input prices, labour, logistics and inflation were “settling in for the long haul.”
Official data last week showed British manufacturing output in October remained more than 2% below its pre-pandemic level.
The survey of 303 companies was conducted between Nov. 3 and Nov. 24.
The figures come ahead of the BoE’s interest rate announcement on Thursday as it tries to balance rising inflationary pressures with the risk that the Omicron variant of the coronavirus slows Britain’s recovery from the pandemic.
(Reporting by Victor Jack; Editing by William Schomberg)