Page last updated at 06:35 GMT, Monday, 12 May 2008 07:35 UK

Firms 'up prices as costs soar'

The production line at the BMW plant in Cowley, Oxford
Manufacturers are hiring new staff despite facing higher costs

Manufacturers are raising prices as they face the strongest cost pressures in over 20 years, a Confederation of British Industry (CBI) survey shows.

The CBI said that small and medium firms were struggling with high energy and raw material prices.

However, the survey said that despite the prospect of higher costs, manufacturers were adding staff.

CBI deputy director John Cridland said some firms were benefiting from a weaker pound and strong growth in Asia.

In the three months to April, 51% of 419 firms surveyed by the CBI said their average unit costs had gone up. Only 7% said they had decreased.

"Energy costs are really beginning to bite," Mr Cridland told the BBC.

"It's raw materials prices as well, particularly in the metals industry, and food input prices."

Mr Cridland said that price rises were mainly affecting other businesses rather than consumers.

"It's a bit disappointing because manufacturing had been doing well in the credit crunch," he said.

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