Factory costs at 30-year high

UK MANUFACTURERS face the steepest rise in the cost of doing business in nearly 30 years as inflation stalks the economy.

In its monthly health check on British industry, research group IHS Markit said input prices are rising at the greatest extent since its survey began in 1992.

Disruptions to supply chains in the wake of the pandemic have led to shortages of components and raw materials – holding back production as demand booms. And the cost of energy, staff and freight is rising.

‘Costs continue to surge relentlessly higher, rising at the steepest pace in the three decades of survey history,’ said Rob Dobson, director at IHS Markit.

He warned higher prices at the factory gate will push up the cost of living. The findings will pile pressure on the Bank of England to raise interest rates despite the emergence of the Omicron variant of coronavirus.

Markit said its UK index of activity, where scores above 50 show growth, rose from 57.8 in October to 58.1 in November. That was stronger than the 57.4 in Germany and 55.9 in France.

It came as the OECD warned of the threat of Covid variants and inflation. Chief economist Laurence Boone said Omicron was ‘adding to the already high level of uncertainty and that could be a threat to the recovery, delaying a return to normality’.