Three-quarters of NI firms expect to raise prices soon

Over three-quarters of businesses expect to raise prices in the next three months, a survey of members of the Northern Ireland Chamber of Commerce and Industry has found.
Shoppers in Belfast City Centre. 

Picture by Jonathan Porter/PressEyeShoppers in Belfast City Centre. 

Picture by Jonathan Porter/PressEye
Shoppers in Belfast City Centre. Picture by Jonathan Porter/PressEye

The expectation of price rices, according to the latest quarterly Economic Survey report for the first three months of this year, is the highest on record with 77% of those responding predicting hikes.

The survey, carried out by the chamber with the accountancy firm BDO NI, found that high raw material costs are causing “significant concern”.

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Of the 77% of businesses who said they expect to raise prices in the next three months, more than three-quarters said raw material costs would be the main reason.

This comes amid a cost-of-living crisis in Northern Ireland, the UK as a whole and across Europe with inflation rising quickly and earnings largely failing to keep up.

The war in Ukraine has also led to a rapid increase in energy costs, with gas, electricity, home heating oil and vehicle fuel all increasing sharply in price.

On manufacturing, a spokesperson for the chamber said: “Inflationary pressures are very severe for the sector.

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“Eighty-eight per cent of manufacturers are expecting to raise prices, highest across the UK regions, with 95% citing rising raw materials costs as the key driver.”

Demands from workers for pay increases also appeared to be having an impact on some firms’ bottom line.

The spokesperson added: “In addition, pressure from pay settlements (43%) remains one of the highest across the UK regions (UK 36%).”

On services, the spokesperson said: “The service sector recovery continues, although cost pressures dominate for the sector also. Sales and export indicators improved in quarter one, 2022 and all key indicators are positive, with the exception of the cash flow balance.”

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Ann McGregor, chief executive of the Northern Ireland Chamber of Commerce, said: “Businesses are trading in a hugely complex economic climate, including a perfect storm of cost pressures that now also has to take into consideration the fall-out of the war in Ukraine.”

She continued: “The most striking issue is the extent to which inflationary pressures are impacting on businesses, especially manufacturers.

“Deteriorating cash flow positions are concerning, as this leaves firms more vulnerable to economic shocks, including the damaging impact of soaring energy bills, higher inflation, and tax increases.

“Northern Ireland has had skills gaps for years, but the skills crisis is now becoming tangible, to the extent that in quarter one, 2022, 91% of manufacturers and 86% of services were finding it difficult to get staff.

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“While it is good to see that a majority of businesses were trading positively in quarter one, there is concern that our recovery from the pandemic is slowing down as a result of significant cost pressures businesses in all sectors are facing.”