Soaring bills for energy and raw materials top of the list of intense cost pressures that are UK manufacturers to raise their prices, according to a national survey.
The British Chambers of Commerce (BCC) surveyed 349 manufacturers across the country as part of research into what it called the ‘cost of doing business crisis’ that is currently affecting the UK.
Just over three in five manufacturers said they were increasing their prices in response to rising costs. When asked which costs were driving the pressure to increase prices, 87 per cent of respondents cited the cost of raw materials, followed by energy bills (75 per cent) and renumeration costs (70 per cent).
In addition to raising prices, 42 per cent of those surveyed said they were looking to cut costs on their bottom line. Nearly a fifth (17 per cent) also said they were scaling down investments. Overall, just three of the manufacturers surveyed said they were not facing any pressure to raise their prices.
Some of the world’s largest companies have already warned about their inability to absorb further inflation. Speaking to the BBC in early February, Lord Karan Bilimoria, Chair of Cobra Beer and President of the Confederation of British Industry (CBI), said:
“Our input costs in every way – bottling, energy – are up. Freight costs have soared, sometimes 10 times. Wages are increasing and on top of that there are labour shortages. It does mean that businesses have to put up prices. It is a really challenging situation for everyone.”
Shevaun Haviland, Director General of the BCC, said that without government intervention, smaller businesses faced a “nearly impossible” situation that leaves little choice but to raise prices further:
“Our research has shown that businesses were drowning in rising costs even before the energy crisis began to bite. This latest data reveals that companies are now also under extreme pressure from spiralling gas and electricity bills as well as increased wages.
“The majority are having to raise prices in response, though many are also being forced to scale back planned investment or cut other costs from their balance sheet. Unabated, the surging cost pressures produced by the cost-of-doing-business crisis will continue to lead to increased prices.”