Cost pressures for Britain’s factories are growing at their fastest pace since 1980 as companies struggle to find workers to meet growing demand, a leading business lobby group has said.
The CBI warned that higher manufactured goods prices were inevitable after its monthly healthcheck of industry showed labour shortages at their most acute in almost half a century.
The survey of 236 firms found orders picking up over the three months to January, but output growth was limited by bottlenecks.
Rain Newton-Smith, the CBI’s chief economist, said: “Global supply-chain challenges are continuing to impact UK firms, with our survey showing intense and escalating cost and price pressures.”
According to the CBI’s industrial trends survey:
Average costs growth accelerated at the fastest pace since April 1980.
Average domestic price growth in the quarter to January was similar to October, which was the highest figure since April 1980 and is anticipated to accelerate over the next three months.
Average export prices in the quarter to January grew at their quickest pace since April 1980 and price growth is again expected to pick up over the coming quarter.
The share of firms citing skilled labour as a factor likely to limit output next quarter rose to its highest since October 1973.
The annual rate of inflation as measured by the consumer prices index hit its highest level in almost 30 years in December, and is set to climb further from 5.4% to at least 6% over the coming months.
Newton-Smith said government action was needed to ease cost pressures from spiralling energy bills and to encourage investment.
“It’s good to see firms looking to invest more in training and retraining as labour shortages continue to bite. And planned increases in spending on plant and machinery is a welcome sign of much-needed strengthening in business investment. Further fiscal measures to get more firms investing will be needed to set the UK on a long-term path to sustainable growth.
“Meanwhile, against the backdrop of rising energy prices, which are adding to inflationary pressures, short-term action is needed from the UK government to find urgent solutions for firms that are struggling.”
