UK factories predict most widespread price hikes since 1980s – survey

A vehicle is pictured on a production line at the Vauxhall Automotive Plant in Ellesmere Port, Britain July 6, 2021. REUTERS / Phil Noble

LONDON, Oct. 5 (Reuters) – More UK manufacturers plan to hike prices than at any time in the past three decades, according to survey that adds to signs of mounting inflationary pressure in the fifth economy global.

The net balance of industrial companies planning to raise their prices rose to + 60% in the last quarterly survey of British Chambers of Commerce, up from + 57% in the second quarter and the highest since the survey began in 1989.

The share of service companies anticipating price increases was the highest since 2008, at 38%.

The Bank of England is watching for signs that Britain’s recent rise in inflation may last longer than expected. He said the case for a first rate hike since the onset of the coronavirus crisis appears to be strengthening.

“Acute supply shortages and rising raw material costs caused a historic surge in inflationary pressures in the third quarter,” said Suren Thiru, chief economic officer of the BCC.

But there is little evidence that higher inflation is fueling a large increase in wage settlements, meaning the BoE should have enough leeway to keep interest rates stable over the medium term, Thiru said.

The share of BCC member companies reporting higher domestic sales during the July-September period rose to 47% from 44% in the second quarter, which Thiru said was a “disappointing and modest increase.”

The survey found that 27% of companies invested in the third quarter, unchanged from the previous three months, which the BCC said was “another disturbing warning sign for a longer-term recovery.”

In April, Finance Minister Rishi Sunak introduced a big tax incentive to try to encourage companies to invest more.

The online survey of 5,737 companies was conducted between August 23 and September 13.

Written by William Schomberg Edited by Mark Heinrich

Our Standards: The Thomson Reuters Trust Principles.

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