UK manufacturers expect lowest inflation since March 2021 – CBI

LONDON (Reuters) – British manufacturers expect to raise prices by the smallest amount since March 2021 over the next three months, though price increases will still be much faster than their long-run average, a survey showed on Wednesday.

The figures highlight the uncertainty facing the outlook for inflation in Britain, where consumer price inflation has fallen from last year’s four-decade high, but less rapidlythan the Bank of England would like.

The Confederation of British Industry (CBI) said its monthly index of manufacturers’ average selling price expectations fell to +21 in May from +23 in April, its lowest in more than two years but well above its long-run average of +6.

“With demand subdued and the outlook for costs improving, manufacturers expect growth in their selling prices to slow, which should feed through to measures of inflation over time,” CBI deputy chief economist Anna Leach said.

The CBI’s monthly order book balance rose to a three-month high of -17 in May from -20 in April, but remains just below its historic average of -13. The export order balance fell sharply to -26 from -9.

“Expectations for output growth in the coming three months have turned negative, which doesn’t suggest UK manufacturing is poised to recover any significant momentum in the near term,” Leach said.

The CBI survey was based on responses from 236 manufacturers between May 2 and May 16.

(Reporting by David Milliken; Editing by William Schomberg)