Record number of UK manufacturers raise prices in Q4
By Iain Gilbert
Date: Monday 13 Dec 2021
(Sharecast News) - A record number of UK manufacturers have raised prices in the face of strong inflationary pressures during the fourth quarter of 2021, according to the Make UK/BDO manufacturing outlook survey.
UK prices rose from a balance of +50% in the third quarter to +52% in the fourth, with an expected increase to +58% pegged for the next quarter - the highest balances in the survey's history.
Make UK/BDO stated that to give an indication of just how sharply inflation has bitten, and how manufacturers have responded to it, the equivalent balance in the fourth quarter of 2019, just before the onset of the Covid-19 pandemic and leaving the EU, was just +5%.
The survey also revealed a similar picture existed for export prices, where the balance rose from +43% to +51% - a level it was expected to remain at in the next quarter. The balance in the final quarter of 2019 was -7%.
According to Make UK, anecdotal evidence from companies suggested that price rises of around 10% were a regular occurrence and were now passing by without a response from customers, suggesting inflation was becoming built-in.
Make UK senior economist James Brougham said: "While manufacturers will be able to enjoy some festive cheer this year, their spirits will be tempered by the eye-watering impact of escalating cost pressures which are leading an increasing number to pass these on to the consumer.
"Given the global nature of some of these pressures there is little sign that they will abate anytime soon. However, they will hope as we enter a fresh year that these will gradually unwind, with the compensation being that demand prospects among their major markets continue to look strong."
According to the survey, the balance on output fell slightly to +35% from +42% in the third quarter and, looking forward to the first quarter of 2022, output was expected to contract slightly to +30%. Total orders also fell to +43% from +49%, however, growth was predicted to continue in the first quarter of 2022 with a forecasted balance of +33%.
Make UK has forecast growth for manufacturing of +6.9% in 2021, down slightly from +7.1%, and +3.3% in 2022.
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