British factories hike prices rapidly to protect margins

British factories are hiking prices for goods rapidly in a bid to offset swelling raw material costs, reveals official figures released today.

Prices charged by manufacturers accelerated 9.9 per cent in the year to January, up from 9.3 per cent in December, according to the Office for National Statistics (ONS).

Soaring oil prices driven by a sudden rebound in global demand as countries around the world push to get their economies back to pre-pandemic health has eaten into factories’ margins, prompting them to lift prices.

The fresh factory gate price print adds further evidence suggesting consumer inflation will soar much higher in the coming months.

Factory goods are used broadly across the economy, meaning if manufacturers hike prices, incentives among consumer-focused businesses to raise their prices will strengthen.

Separate data released by the ONS today revealed consumer price inflation is running at 5.5 per cent, its highest level in nearly 30 years.

Some economists expect consumer inflation to hit as high as 7.9 per cent this April.

Inputs used by factories climbed 13.6 per cent over the last year, mainly driven by a 45 per cent jump in crude oil prices.

Prices for metals used in the production process, such as iron and steel, also pushed input costs higher.