Manufacturers managing cost hikes ‘admirably’
1 min read
The relentless and unprecedented pace at which manufacturers’ production costs are rising is being managed “admirably” by the industry, said an analyst on the wake of new factory gate inflation figures today (14 July).
According to the latest figures released by the Office for National Statistics, the output price index for home sales of manufactured products rose 10 per cent in the year to June while the input price index for materials and fuels purchased by the industry rose 30.3 per cent.
Alysoun Stewart, head of entrepreneurial advisory at accountants Grant Thornton said: "The relentless rise in production costs is being managed admirably by the manufacturing sector at present, with a 30.3 per cent increase in input prices during the 12 months to 30 June only equating to a 10 per cent increase in output prices over the same period.
"Even without the increase in petrol, food, beverages and tobacco, input costs still jumped 15.5 per cent, showing cost pressures are now coming from across the board.
"Something has to give. As costs continue to spiral the ability to absorb price increases becomes increasingly limited, and there is only so much cost cutting, streamlining and outsourcing a business can do before these price increases must be passed on to the consumer.
"With today's statistics, we should expect to see even greater inflationary pressures on the UK economy within the coming 12 months. Producer price increases will be passed on more readily as manufacturers battle to retain margins, but the readiness of consumers to accept these price increases under the present economic conditions will remain a constraining factor on major price jumps."
