British factories to launch fastest price hiking cycle on record

British factories are preparing to launch the fastest price hiking cycle on record in a sign that inflation will surge even higher in the months ahead.

A net balance of one in every eight UK manufacturers intend to raise prices, according to research by the Confederation of British Industry (CBI).

Products produced by factories are used widely across the UK economy, meaning price hikes will likely ripple throughout the supply chain.

Incentives for consumer-focused firms to raise prices would strengthen as a result of higher factory good costs in order to protect margins.

The cost of living in the UK is already running at a 30-year high of 5.5 per cent. 

Fresh inflation estimates are published by the Office for National Statistics (ONS) tomorrow ahead of Chancellor Rishi Sunak’s spring statement.

Economists expect the rate of price increases to trend even higher over the second half of the year, mainly driven by Russia’s invasion of Ukraine sending energy prices higher.

Experts at KPMG think inflation will hit double-digits in October due to the energy watchdog hiking the cap on bills to account for elevated oil and gas prices.

Soaring prices, tax hikes and swelling energy bills are set to erode Brits’ living standards at the steepest rate since the 1970s, according to some economists.

Elevated inflation has pushed the government’s debt interest bill to its highest ever level for a February, figures released by the ONS showed.

Oil and gas prices have skyrocketed since Russia invaded Ukraine on concerns about security of energy supplies, raising businesses’ costs by thousands of pounds.

The CBI called on the government to provide more support for companies at tomorrow’s spring statement.

“The government must use tomorrow’s spring statement to provide relief to both energy intensive industries and vulnerable consumers,” Anna Leach, deputy chief economist at the CBI, said.

Despite the sharp increase in factory selling prices, demand has held up relatively well.

Some 26 per cent on net of manufacturers’ order books were larger than is typically seen during March, the CBI said.