Brexit latest: Manufacturing price input cost rises hit 69-month high

Purchase price inflation was the highest since 2010 and the fourth-highest reading since the survey began in 1992

Manufacturing price pressures are rising fast (Getty)

Manufacturing output continued to grow in October but price pressures also increased to a 69-month high, according to the latest survey snapshot of the sector.

The latest Markit/Cips Purchasing Managers' Index showed a reading of 54.3 in the month, down slightly from the 55.5 reading in September but higher than the 50 point that separates growth from contraction.

It was marginally lower than the 54.5 reading City of London analysts had been expecting.

But purchase price inflation was the highest since 2010 and the fourth-highest reading since the survey began in 1992.

David Noble of CIPS said the price of flour, dairy products, zinc and steel jumped, reflecting the steep drop in the value of sterling since the Brexit referendum vote.

Factory output prices also rose at their fastest pace since 2011.

“The weaker pound is supporting improving demand from export customers, but price rises from higher import costs are becoming more significant and will be felt in consumers' pockets sooner rather than later," said Lee Hopley of the EEF manufacturers' organisation.

Sterling is down around 18 per cent against the dollar since 23 June and was the worst-performing global currency against the greenback in October.

The initial estimate of GDP output in the third quarter of 2016 showed that manufacturing output fell by 1 per cent, following a 1.6 per cent surge in the second quarter.

Still growing...

Paul Hollingsworth of Capital Economics said that the positive PMI reading for October suggests that the sector will return to growth in the final quarter.

“This provides another reason to be optimistic that the economy hasn't lost too much momentum,” he said.

....but price pressures rising

Overall GDP is estimated by the Office for National Statistics to have grown by 0.5 per cent in the third quarter of the year, defying predictions the economy would contract in the wake of the Brexit vote.

The Bank of England's Monetary Policy Committee [MPC] is due to decide on Thursday whether to cut interest rates again, following August's reduction to 0.25 per cent.

Most analysts now expect the central bank to hold fire in the face of a stronger than expected economy and rising inflationary pressures.

“If any MPC members were on the fence about interest rate moves this month, this latest survey would argue against any further cuts right now,” said Ms Hopley of the EEF.