Soaraway crude to reverse car prices
COST pressures are spreading fast through industry after crude oil burst through the $48 barrier. Steel costs are rising rapidly and this is set to reverse a four-year slide in UK new car prices.
Oil speculators are making huge gains as crude advances towards $50 a barrel. Iraqi fighting and worries about Russia drove it up to $48.70 in New York - a rise of over $1. In London, North Sea crude hit $43.80 before easing to $43.66. It is up 50% in six months.
This is increasing costs for steelmaker Corus, but it is passing the pain to its customers.
It has hiked prices three times this year - by 5% to 8% in January, 10% in April and 25% last month. It plans a further 6% in October, bringing the total rise above 50%.
This is pushing up new car prices for the first time in five years. They could rise by about 2%, adding £260 to a £13,000 car, says the Society of Motor Manufacturers and Traders.
Rising raw material costs threaten to push UK inflation a notch higher. Inflation in the service sector was 3.3%, and 'goods' inflation just 0.1% in the year to July, says Steven Andrew, at Isis Asset Management.
