Scottish firms 'raise prices as cost pressures intensify'

Scottish firms raised their selling prices last month at the fastest pace for nearly six years as cost pressures intensified, according to a report.

The latest Bank of Scotland PMI found Scottish business activity returned to growth in December.

But input costs continued to rise, with the rate of inflation quickening to a 67-month high.

Subsequently, output prices increased at their fastest rate since April 2011, the report said.

Service providers linked the rise in input costs to higher prices for food, fuel and timber, while goods producers pointed to the depreciation of the pound.

The December survey of purchasing managers indicated that private sector output bounced back into growth, reaching its highest level for three months.

The expansion was broad-based across Scotland's manufacturing and service sector, with panel members linking this to stronger underlying demand.

The data also pointed to a return to growth in Scotland's workforce numbers, although the rate of job creation remained only moderate overall.

There was also a slight increase in new business during the final month of 2016, ending a two-month sequence of decline.

Nick Laird, from Bank of Scotland Commercial Banking, said: "With output, new orders and employment all returning to growth, and backlogs slowing, Scotland's economy bounced back at the end of 2016.

"The improvement in business conditions across both the manufacturing and service sectors puts Scotland on a firmer footing as we start the new year.

"Headwinds remain, however, principally through the continued increase in input costs, which rose at their sharpest pace for 67 months.

"Given the strain this will place on operating margins, firms throughout Scotland will undoubtedly be looking for this to ease during the year ahead."