Most UK manufacturers raising prices on record: survey

Trade body Make UK and accountants BDO said a net balance of 58% of manufacturers had increased their prices in early 2022, up from 52% at the end of a 2021, the fifth quarterly rise in a row.

It was the highest reading since the survey began asking questions about prices in 2000 with domestic prices accelerating sharply, even before the impact of Russia’s invasion of Ukraine on energy prices was felt.

The survey of 287 companies was conducted between Feb. 1 and Feb. 21.

In late 2019, before the pandemic and Britain’s departure from the European Union’s single market, the balance stood at just +5, Make UK said.

“Companies are now facing eye-watering increases in costs which are becoming a matter of survival for many,” Stephen Phipson, chief executive at Make UK, said.

“While some of the increases are driven globally, the government cannot use this as a shield from the fact some are self-imposed and, added together, are now forming a perfect storm for companies.”

He called on finance minister Rishi Sunak to use a March 23 budget update to help employers by offering more tax relief and extending a two-year tax incentive for business investment which is due to expire in 2023 as a step towards making it permanent.

The gauge of output prices in a different survey of manufacturers, the IHS Markit/CIPS PMI, hit a record high in December and has receded slightly since.

The Make UK survey showed output and orders slowing but still high by historical standards. Employment growth and investment intentions picked up slightly and expectations for the second quarter of 2022 remained positive.

Also on Monday, a group representing small employers urged Sunak to drop the business investment super-deduction that Make UK wants to see made permanent.

Martin McTague, chair of the Federation of Small Businesses, said in a letter to Sunak that the Treasury should move away from the expensive incentive instead take measures to free up funds for investment at the local level.