UK factories reported the slowest growth in their costs in nearly two years, adding to other signs that the surge in inflation has probably peaked, but their order books remained weak, according to a survey published on Tuesday.
The Confederation of British Industry (CBI) said manufacturers’ average unit costs in the three months to January grew at the slowest pace since April 2021 and the increase in their sales prices was the slowest since July 2021.
Global supply chain pressures, labour shortages and energy costs were easing, helping slow the increase in costs, Anna Leach, CBI Deputy Chief Economist, said.
The signs of easing inflation pressure in the manufacturing sector is likely to be welcomed by the Bank of England which is nonetheless expected to raise interest rates for a 10th consecutive meeting next week.
The CBI said output volumes were stable over the three-month period with new orders flat but falling further below normal levels.
Both measures were expected to rise but the share of firms reporting that orders or sales would constrain output hit its highest since April 2021.
A monthly measure of industrial orders showed a bigger-than-expected fall to -17 in January. A Reuters poll of economists had pointed to a reading of -8.