UK manufacturers hit by sharpest rise in cost inflation since Black Wednesday in 1992

UK manufacturers face the sharpest monthly cost inflation surge since Black Wednesday in 1992, driven by rising energy prices linked to Middle East conflict. The S&P Global Manufacturing PMI reveals a 14-point jump in cost inflation in March, primarily stemming from fuel, transportation, and energy-intensive materials, signaling mounting price pressures amid geopolitical risks. Growth in UK manufacturing and services slowed markedly, with the composite PMI falling to 51 from 53.7 in February, indicating near-stagnation. Retail sales declined at their fastest annual pace since April 2020, reflecting subdued household spending and weaker demand overall. Analysts warn that continued high energy prices and inflation pose risks of a pronounced recession by year-end. The conflict's impact is also visible in falling new orders and export sales, notably from the Middle East, where project delays and travel disruptions are materializing. This complicates the Bank of England’s upcoming interest rate decisions as policymakers balance inflation risks against slowing growth. Risks to the fragile economic recovery remain elevated, with the potential for further slowdown or contraction if pressures intensify. Market participants should watch UK manufacturing cost trends, energy price volatility, and geopolitical developments closely as key near-term drivers for precious metals, particularly gold's safe-haven demand. A further rise in energy costs or escalation of conflict could underpin continued upward pressure on inflation expectations and gold prices around $2,400/oz resistance.