UK businesses ‘putting up their prices at the slowest pace in two years’

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As businesses up and down the UK continue to pick their way through the challenges brought by a sluggish economy, it seems that there is at least some hope of inflation cooling soon.

That much emerged from the Bank of Scotland’s UK Sector Tracker, which found that during March, UK businesses increased their prices for goods and services at the slowest rate in nearly two years.

What else became apparent from the data?

The aforementioned tracker found that price inflation across the manufacturing and services sectors in the UK fell from 62.2 in February, to 58.9 in March. This is the lowest level recorded since April 2021, and the heftiest decline on a month-by-month basis since April 2020.

If the tracker’s reading is above 50, this indicates price inflation, whereas a reading below 50 indicates price deflation. So, although the March reading certainly showed inflation, it would appear that the upward climb in prices charged by many UK businesses is now softening.

14 sectors were monitored by the tracker; of these, 11 recorded slower increases in output prices in March, compared to 10 the previous month.

Of these sectors, it was manufacturers of technology equipment that registered the steepest drop in their reading, from 68.8 in February to 61.3 in March. There was a similar drop for automobile manufacturers over the same period, from 67.8 to 60.7.

Businesses in these sectors indicated that an improvement in supply conditions and weaker increases in their own input costs put them in a better position to slow the rate of price rises.

Indeed, March saw the tracker’s Supplier’s Delivery Times Index – which measures the performance of supply chains – climb to its highest level since records began in 1992.

It was also in March that the measure of input cost inflation across the service and manufacturing sectors fell to the lowest level in almost two years, with 10 out of 14 sectors surveyed seeing drops in their index price index.

Food and drink manufacturing, however, did see markedly increased input costs in March, as rising food prices continue to be a headache for many people around the UK.

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