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Feb 23, 2017
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Record rise in CBI retail prices gauge signals spiralling inflation

By
Reuters API
Published
Feb 23, 2017

Another sign that British inflation may surge more than expected can be found in the Confederation of British Industry's latest report. The trade group noted a record increase in its gauge of retailer selling-price expectations.


Next is one of the retailers that said it will have to raise prices



The group's quarterly balance of retailers expecting to raise prices in the next three months versus those that don't, a data set stretching back to 1983, increased by a record 51 points during the first quarter to hit 65 points. That is its highest level since the second quarter of 2011.

Next has already said it will have to raise prices this year due to higher costs following the lower value of the pound. And a number of luxury brands have acted to hamronise prices in order to reduce the advantage UK stores have given the on-going weakness of the pound. This week it was also reported that Swatch would raise its watch prices, while electronics retailers including Apple and Microsoft have hiked UK prices too.

The surge in the CBI index adds to signs that economists - who underclubbed forecasts for previous inflation spikes in 2008 and 2011 - may be too conservative about how much prices will be boosted by the pound's fall following June's Brexit vote.

Other gauges of British inflation pressure have also increased by record amounts recently. The European Commission's gauge of selling-price expectations in its monthly retail survey - which dates back to 1988 - showed a record increase in December. And the closely-watched Markit/CIPS Manufacturing Purchasing Managers' Index pointed to a record increase in prices paid by factories for raw materials and energy last month.

Additional reporting by Sandra Halliday
 

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