Factory gate price inflation fell to zero in Britain during last year, for the first time since 1960. Official figures out this week showed that producer prices charged by manufacturers to UK customers were unchanged in the year to December 1998.
The strong pound has led to cheaper imported raw materials, while commodity prices have remained low.
‘Weakness in manufacturing means firms are unable to raise prices,’ said Elaine Barnet, economic adviser at the Institute for Manufacturing.
Firms have passed input cost savings directly on to customers. ‘Big discounts are available. This is a good time to invest in capital equipment,’ said one factory automation supplier.
Manufacturers faced a number of gloomy surveys at the start of the year. Accountant KPMG reported that the downward trend of company failures may be over, with receiverships rising in the second part of last year.
The Chemical Industries Association said this week that it has cut its growth prediction for the UK chemical industry to 0.5%. It added that the economy has reached its lowest point.
Meanwhile, engineering leaders in Scotland warned of further rounds of job cuts in the first half of this year. ‘There is significant fall-out to come,’ said Peter Hughes, chief executive of trade body Scottish Engineering.