| Higher fuel prices affect manufacturing sector, says study |
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LONDON: Cost of raw material went up substantially in November, mainly due to increase in gas prices and manufacturers were not able to pass on the higher costs, according to official data. The Office for National Statistics said input prices rose a seasonally adjusted 1.4 per cent in November from October for a 12.5 per cent year-on-year increase.
Analysts had forecast an unchanged month-on-month figure and an annual increase of 9.4 per cent.
The ONS data showed that there has been a 19.8 per cent increase in fuel prices over the month. This included a 44.9 per cent month-on-month rise in gas prices and an 8.1 per cent increase in electricity prices.
The monthly rise for October was revised from 0.3 per cent to 1 per cent, mainly due to fuel prices being revised up as forecasts were replaced by actual figures.
ONS said manufacturers have not been able to pass on these extra costs to consumers on account of stiff competition. This has naturally affected profit margins.
ONS said manufacturers' output prices had fallen by 0.2 per cent in November compared with October, on a non-seasonally adjusted basis. Analysts had expected a rise of 0.2 per cent. The fall has been attributed to a 3.3 per cent fall in petroleum product prices between October and November.
On an annual basis, output prices rose by 2.3 per cent, the lowest rise since April 2004.
However, core output prices (which exclude volatile items such as food, beverages, tobacco and petroleum products) have picked up slightly above expectations -- a seasonally adjusted rise of 0.1 per cent from October compared with a forecast for a 0.1 per cent fall.
On an annual basis, core prices went up 1.2 per cent against expectations of a 2.5 per cent increase.
Meanwhile, a separate study by the Confederation of British Industry, done in the backdrop of record increase in energy costs, finds that more manufacturers expect output to fall than rise over the next three months. Adding to these worries is the prospect of weak export orders.
The study found that price expectations climbed to an eight-month high, and manufacturers are now hopeful of passing on some of the increased costs to consumers.
The CBI said its monthly manufacturing order books balance rose to a five-month high of -22 in December after -25 in November and against analysts' forecasts for only a slight improvement to -24. However, the total order books still remained 'below normal'.
The CBI said the balance of export orders dropped to -23 in December from -13.
Posted
on : Tue, 13 Dec 2005 20:05 GMT | General News
By : Paula Jenkins
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