The price of manufactured goods will rise steeply in the coming months, even though trade activity is slowing, the CBI has warned.
Rising oil prices have been cited by manufacturers as a main reason for the inflation.
The CBI said its May Industrial Trends Survey had recorded the highest balance of manufacturing firms quoting product price increases since 1995. The survey found 36% of firms expect to put their prices up during the next quarter.
Some 21% of firms rated their order book as above normal and 31% said it was down. Firms also do not expect their output to grow over the next three months but believe it will flatten out.
The CBI said oil prices had risen 14% from last month, metals rose 5%, with rises exacerbated by the pound slipping against the dollar.
“These rising inflationary pressures make it ever more unlikely that we will see the cuts in interest rates expected by the markets only a few weeks ago,” said Ian McCafferty, CBI chief economic adviser.
