Northern Ireland consumers facing higher prices as costs of manufacturing grow
The days of Northern Ireland consumers being insulated from the rising prices hitting manufacturers are "finished", a business boss has said.
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The warning came as the Markit/CIPS UK Manufacturing purchasing managers index (PMI) hit a three-month low in February as new orders slowed and Brexit-induced cost pressures remained near record levels.
Sterling has lost around 10% of its value against the euro since the EU referendum, and around 19% of its value against the dollar - making UK goods cheaper overseas, but making goods more expensive to import.
Stephen Kelly, head of Manufacturing NI, said: "Input cost inflation is running at 20% on the year but prices have only risen 3.5%.
"The customer and consumer have until now been insulated by the manufacturers from the worst of inflationary pressures but those days are now finished."
Despite falling further from December's two-and-a-half-year high, production and new orders were robust, with the Brexit-hit pound stoking overseas demand.
Mr Kelly urged manufacturers in Northern Ireland to take advantage of the possibility of new markets at home and overseas.
"The adjustment in the value of sterling has made raw material imports more expensive but it has also made our exports cheaper and imported finished goods more expensive to UK consumers.
"Now is the time for our local manufacturers to really press on and build new markets at home, in Great Britain and abroad."
Rob Dobson, senior economist at IHS Markit, said output remained "comfortably above" the long-run average of 51.6, but growth may ease in the months ahead.
"The survey is signalling quarterly manufacturing output growth close to the 1.5% mark so far in the opening quarter which, if achieved, would be one of the best performances over the past seven years.
"The big question remains as to whether robust growth can be sustained or whether it will continue to wane in the coming months.
"The slowdown in new order growth and a drop in backlogs of work suggest output growth may slow further."
The separate Ulster Bank purchasing managers index (PMI) for Northern Ireland in January said currency fluctuations had hit input costs for businesses, particularly in the manufacturing sector.
Ulster Bank chief economist Richard Ramsey said the "positives of the weak sterling, which have been prominent for a number of months, continue to be evident".
"But the negatives of the exchange rate are also starting to feature more and more prominently," he said.
Manufacturing NI this week joined other business groups and further education bodies to warn of the importance of power-sharing as the Assembly election takes place today.
"Given the immense changes that lie ahead as the UK leaves the EU, the economic stakes for Northern Ireland are exceptionally high.
"This in turn has clear implications for the peace process."