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Manufacturers 'confident prices will rise'

Published On 29 May 2007 at 08:59:13

The UK's manufacturers - including many small and medium-sized enterprises (SMEs) - are confident that they can increase prices in the near future, a new report suggests.

According to the May Industrial Trends Survey, published by the Confederation of British Industry (CBI), 32 per cent of manufacturers expect prices to rise in the next quarter - compared to eight per cent who think prices will fall over the period.

The balance of +25 per cent is the highest since March 1995 and is the 12th consecutive positive balance since May last year.

"In spite of the slight weakening in export orders the manufacturing sector continues to go from strength to strength with healthy order books, solid output growth and continued ability to put up prices, reversing the squeeze in profit margins of last year," explained Ian McCafferty, the CBI's chief economic adviser.

"However, we have not yet seen the impact of the four recent rises in interest rates on domestic demand so, while this data will be closely monitored by the bank, there is little justification for another rate rise immediately."

Recently, the British Chamber of Commerce (BCC) warned that future interest rate increases could cause "monetary overkill" for the UK's SMEs.

"British business accepts that the Monetary Policy Committee must restore credibility in the anti inflation strategy - but higher interest rates are already causing considerable pain," explained the BCC's economic adviser, David Kern.

 

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