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Highlights
- Cost inflation has surged in May as per Lloyd’s UK Sector Tracker.
- Tourism and recreation firms witnessed the greatest cost inflation for the second month.
- The margins of service providers have been squeezed more tightly as compared to the manufacturers.
The UK has been witnessing record-high inflation levels lately, which has increased the operational costs for businesses. However, despite escalating inflation levels, UK businesses have been holding back from entirely passing on the increasing costs to the customers.
As per the most recent UK Sector Tracker by Lloyds Bank (LON: LLOY), cost inflation surged in May, which could be mainly attributed to the cost surge in the service sector as firms struggled with skyrocketing energy bills and wages along with intense competition for manpower.
Tourism and recreation firms witnessed the greatest cost inflation for the second month. Overall, consumer demand is being dampened due to the rising inflationary pressure, making it difficult for businesses to forward the increased costs to the consumers.
The margins of service providers have been squeezed more tightly as compared to the manufacturers, according to the UK Sector Tracker. For manufacturers, the difference between the price and input cost is the highest, representing that the demand for goods is rather greater than the demand for services.
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The Bank of England has recently gone for another rate hike in response to the rising inflation, raising the interest rate to 1.25%. Inflation levels are expected to cross 10% over the coming months, signalling further rate hikes.
Amid the rising inflation and interest rates, UK investors can keep an eye on the following manufacturing stocks.
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GSK plc (LON: GSK)
The shares of the UK-based producer of pharmaceutical products, GSK plc, were down by 0.31% as the market opened at around 8:00 AM (GMT+1) on 21 June 2022, at GBX 1,694.00. The FTSE 100 company has provided its shareholders with a return of 19.02% over the past one year as of 21 June 2022, while its YTD return stands at 5.45%. GSK’s current market cap stands at £86,388.16 million.
Anglo American plc (LON: AAL)
The shares of the leading British producer of diamonds, platinum, copper, and other metals, Anglo American plc, were up by 0.15% as the market opened at around 8:00 AM (GMT+1) on 21 June 2022, at GBX 3,358.50. The FTSE 100 company has provided its shareholders with a return of 23.77% over the past one year as of 21 June 2022, while its YTD return stands at 11.52%. AAL’s current market cap stands at £44,855.68 million.
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Imperial Brands plc (LON: IMB)
The shares of the UK-based producer of tobacco and related products, Imperial Brands plc, were up by 0.30% as the market opened at around 8:00 AM (GMT+1) on 21 June 2022, at GBX 1,820.00. The FTSE 100 company has provided its shareholders with a return of 15.16% over the past one year as of 21 June 2022, while its YTD return stands at 12.29%. IMB’s current market cap stands at £17,245.15 million.
