The number of manufacturers predicting price rises in the next three months reached its highest level for 46 years in February, with Russia’s invasion of Ukraine expected to cause significant disruption.
According to the Confederation of British Industry (CBI), who surveyed 224 businesses in February, the last time this many manufacturers were bracing for price rises was December 1976, when the world was in the midst of an oil crisis and inflation reached nearly 17 per cent.
Separate research published earlier in February suggests that the majority of UK manufacturers are now raising their prices in response to intense cost pressures. Similar responses are evident in other industrialised nations, with factory prices in Germany increasing by 25 per cent in January year-on-year.
Tom Crotty, Group Director at INEOS and Chair of the CBI Manufacturing Council, commented:
“With rising prices and inadequate stocks of finished goods, the cost-of-living crunch continues to bite across the [manufacturing] sector, alongside global energy and supply chain challenges.”
The spike in global energy prices has been a particularly strong driver of inflation over the past year, and experts now expect the situation will worsen following Russia’s invasion of Ukraine.
Russia is the world’s second largest exporter of crude oil and the largest exporter of natural gas. Ukraine is also an important supplier for several industries as a major exporter of metals and various food and agricultural products.
Speaking to Supply Management on 24 February, Chris Rogers, a supply chain expert at freight forward company Flexport, said:
“Procurement teams have to really take a hard look not just at their direct procurement during this conflict, but also their indirect procurement. So you might say, 'I make beer in the UK, why do I care about this?' Well, if your can supplier is using Russian aluminium, then that's going to be a problem for you. Supply chain and procurement managers need to be investing in visibility. Where are your shipments? Where are they coming from, and where are your suppliers' suppliers' situated?”
Greater Manchester SMEs looking to increase their resilience to supply chain disruption are encouraged to speak to one of our dedicated Manufacturing Advisors.