Manufacturers’ electricity costs plummet

13 January 2009

Manufacturers’ electricity costs fell by 27 per cent in the fourth quarter of 2008 as deflationary pressures strengthened.

According to accountancy firm BDO Stoy Hayward’s quarterly manufacturing energy tracker, electricity prices came down quickly in the last three months of the year following the unprecedented rises of the preceding 12 months.

In spite of the quarter-fall in prices, electricity prices were still 51 per cent higher at the end of 2008 than they had been at the corresponding point in 2007.

Tom Lawton, head of manufacturing at BDO Stoy Hayward, said: “Although the trend of these important costs has made a welcome shift downwards in the last quarter, the scale of the increases on an annual basis will have undoubtedly caused major problems to many manufacturers in what is a very difficult economy.”

Oil prices have also fallen after a period of steep price inflation. Brent Crude averaged $52 a barrel in the fourth quarter, down from $112 in the third quarter of the year and $91.70 in the final quarter of 2007.

A corresponding reduction in gas prices was not in evidence. Gas prices fell by just 1 per cent in the final quarter of the year, making for a year-on-year increase of 21 per cent. The cold winter and the Ukraine-Russia imbroglio are both thought to have had the effect of arresting the fall in prices.