LONDON, (Reuters) – British manufacturers are expected to increase prices the most since 1977 in the next three-months. This is after they have faced the largest price rise since 1980, and severe labour shortages. A quarterly survey was released Tuesday.
Confederation of British Industry’s survey revealed a strong increase in orders since July 2018 and the highest export demand growth, but optimism dropped overall as businesses struggled with intense inflationary pressures.
“Global supply chain challenges are continuing to impact UK firms, with our survey showing intense and escalating cost and price pressures,” CBI chief economist Rain Newton Smith said.
British consumer price inflation continues to rise sharply. In December it was 5.4%. There were also signs that cost growth in the UK for businesses is slowing, as indicated by other surveys.
The CBI data Tuesday will likely confirm the Bank of England’s concerns that inflation may be ingrained into pricing plans of businesses.
According to the survey, the manufacturers expected domestic prices would rise in the following three months. This was the highest level since April 1977. This was the best balance of export price expectations since January 1980.
In the three-months to January, manufacturers’ average unit costs rose most significantly since April 1980. The percentage of businesses reporting problems due to the lack of skilled workers is the highest ever since October 1973.
The optimism regarding the business environment and the prospects for the coming year fell to their lowest level since January 2021, while the economy was still locked down.
The new orders rose in the past 3 months. January’s new order gauge remained stable at +24. It is below November’s record of +26. Reuters polled economists and forecast a decline to +22.
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