CBI survey revives inflation fears

Click to follow
The Independent Online
WORRIES about rising inflation will be rekindled today by the latest survey from the Confederation of British Industry, showing a sharp rise in manufacturers expecting to increase prices in the next four months.

Some 21 per cent of the manufacturers surveyed expect to raise their prices, compared with 9 per cent who expect to reduce them. The 12 per cent balance expecting to raise prices is three times as high as that recorded in May and four times as high as in June last year.

Howard Davies, the CBI's director general, said it was too early to conclude that the June survey pointed to a change from the recent subdued trend in prices reported by CBI members.

'Companies are still facing tough competitive conditions in both home and export markets and overall inflationary pressures remain low,' he said. Next month's CBI 'Quarterly Industrial Trends Survey' should give a clearer indication of the prospects for factory gate prices.

But the survey will cast doubt on the Treasury's forecast to be published next week, which will show that inflation is expected to turn out lower than forecast in last November's Budget.

The CBI added that there was no sign yet that the April tax increases had hit industry. The net balance of manufacturers expecting to raise their output in the next four months was little changed on May, falling from 23 to 22 per cent.

The survey showed that order books were steady in May at levels unsurpassed significantly in the past five years. Export order books were also at levels last beaten in 1990.

Some 28 per cent of manufacturers said total orders were below what they regarded as normal levels, compared with 25 per cent who described them as better than normal. The net balance of 3 per cent reporting orders below normal was unchanged on the previous month but well up from the negative balance of 17 per cent reported in April. A net balance of 2 per cent said export orders were below normal.

Bundesbank talks up dollar, page 33