Belfast Telegraph

Customers hit in the pocket as cost hikes passed on by business

By John Mulgrew

Retailers and manufacturers are lumbering customers with rising costs at a record level, a new report reveals.

The construction sector in Northern Ireland is now growing for the first time in 11 months, according to the latest Purchasing Managers' Index (PMI) with Ulster Bank.

But input costs for retailers are now at a nine-year high.

The report stated: "The rise in charges at companies in Northern Ireland was faster than the UK average.

"According to respondents, the principal cause of higher output prices was the passing on of higher input costs to their clients."

Overall, the economy continues to grow, but at a slower rate, posting a figure of 53.5, where 50 means no change.

That was slightly ahead of overall private sector growth in the UK as a whole. Employment levels are also up, with job levels in construction rising at their fastest rate in 12 months.

Once again the greatest level of expansion was in Northern Ireland's retail sector.

New export orders continued to rise sharply amid growing business from the Republic.

And while Northern Ireland business activity continued to expand in February, "it was the second month in a row in which growth eased", according to Ulster Bank chief economist Richard Ramsey.

"All four segments of the private sector also recorded increases in both output and employment, with construction returning to expansion after 10 months of contraction, and retail - the fastest growing sector - continuing to experience buoyant demand.

"However, significant inflationary pressures continue to be a key theme, with price rises evident across all sectors."

It was the manufacturing sector that saw the most marked increase to costs, with input prices rising at their fastest rate on record.

Mr Ramsey added: "Where possible, manufacturers seem to be passing these increased costs onto their customers, evident in a record rise in output prices.

"Escalating prices are also apparent in the retail sector, with input price inflation at a high of almost eight-and-a-half years.

"The prices that retailers charge to consumers are now rising at their fastest rate since the survey began around 14 years ago."

He said the increasing costs were continuing to be driven by a weak pound. But it's also driving exports - with manufacturing and cross-border retail witnessing a surge.

"The danger is that the economy takes a back seat as politicians grapple with triggering Article 50 in the UK and re-establishing political stability in Northern Ireland."

Belfast Telegraph