Energy costs and pay pressures see every business sector hike prices - Bank of Scotland tracker

Soaring energy costs and salary pressures are driving record input cost inflation, with all 14 sectors in a major business tracker raising prices charged last month.

The latest Bank of Scotland UK Recovery Tracker showed businesses experiencing “intense pressure” to hike prices.

All 14 sectors monitored in the study increased their prices in October, with 11 sectors increasing what they charged customers by a greater extent than in September. The biggest price rises were by firms in the chemicals, metals and mining and industrial goods manufacturing sectors.

Price increases reflected the sharpest monthly rise in input cost inflation since October 2016, the bank, part of Lloyds Banking Group, noted.

Jeavon Lolay, head of economics and market insight, Lloyds Bank Commercial Banking.

Businesses also experienced intense supply chain pressure in October, with the length of delivery times rising at the sharpest pace since August. Technology equipment and food and drink manufacturers felt the greatest pressure.

Meanwhile, the number of sectors reporting output growth hit a three-month high in October.

Twelve out of 14 sectors reported output growth, up from ten in September, and the highest number since July.

Scott Barton, managing director, corporate and institutional coverage, Lloyds Bank Commercial Banking, said: “October’s data reveal an improved economic picture for the UK, but the supply chain disruption and raw materials shortages that have dogged businesses for months are holding firm. They are now being compounded by rising energy prices and rising salary expectations.

“Many business leaders will be frustrated that they cannot take full advantage of recovering demand and will be concerned that fully passing on higher input prices could make their products and services less competitive.

“While the situation is currently very challenging, the broad expectation remains that this global cost shock will prove transitory and that supply chains will recover next year.”

Jeavon Lolay, head of economics and market insight, Lloyds Bank Commercial Banking, said: “After a brief summer slowdown, the UK recovery regained some momentum at the start of the fourth quarter. However, while encouraging, the headwinds from supply chain disruption and brisk input price inflation are proving both more persistent and stronger. Many firms are currently preoccupied managing continuing pressures on their capacity and bottom lines.

“It suggests that inflationary pressures are likely to continue to intensify in the coming months.”

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