UK Manufacturers See Costs Jump in Wake of Brexit Vote

The pound’s sharp drop following Britain’s vote to leave the European Union is starting to weigh on companies, particularly manufacturers, by increasing the cost of the imported raw materials and goods they require to do business.

Official figures released Tuesday showed that producer prices jumped 4.3 percent in the year through July, compared with a 0.5 percent drop in the year through June as the cost of imports soared due to the pound’s decline.

Commodities like oil, metals and grains are priced internationally in dollars, against which the pound has fallen 14 percent since the June 23 referendum.

Higher costs for manufacturers will pinch companies’ profit margins and eventually mean a higher cost of living for consumers, said Scott Corfe, director of the Center for Economics and Business Research.

“The sharp decline in the value of (the pound) since the Brexit referendum will translate into higher prices for imported goods over the coming months, pushing inflation to above 2.5 percent in the first half of 2017,” he said in a written analysis of the figures. Read More…