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Cost increases to manufactured goods

Prices of manufactured goods are being raised to offset the cost increase in energy, raw materials and transport, but manufacturers margins are also being squeezed, according to new information published today.

The survey, published today by EEF, the manufacturers' organisation and Grant Thornton, highlighted a rise in domestic orders, strong export orders and strong projected growth. However it did add to the Bank of England's concerns about inflation with firms increasing prices.

It suggested that manufacturers have not been able to pass on all of the cost rises they have suffered and that profit margins have been squeezed. In addition, higher inflation is not currently feeding into higher wage settlements, with companies bearing down on wage costs to offset increases in other costs.

Head of Manufacturing at Grant Thornton, Bob Hale said " These figures show most manufacturers have made hay while the sun was shining, and are proving much more resilient to the credit crunch than many analysts had predicted.

"The pain of raw material price inflation and tighter refinancing is balanced by the gain of a weaker pound for exporters and the growing demand for the quality output that UK manufacturers have gained a reputation for producing."

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