Car cost warning adds to fears of 2017 price rise gloom

Car cost warning adds to fears of 2017 price rise gloom"/>

Car (HKSE: 0699-OL.HK - news) prices will start rising within weeks following the slump in the pound, the industry's trade body has warned.

The comments, by the head of the Society of Motor Manufacturers and Traders (SMMT) in an interview with Sky News, add to fears of growing pressure on household budgets already facing  rising fuel and retail costs .

Next (Frankfurt: 779551 - news) used a Christmas trading statement to warn on Wednesday that its prices were on course to rise by 5%.

Meanwhile, Bank of England chief economist Andy Haldane said rising prices may see consumers "throttle back" on spending - a key component of economic growth, which has partly been fuelled by rising household debt.

SMMT chief executive Mike Hawes said new car customers would see increases in the first quarter of the year, with rises of 2-3% over coming months.

It would mean a hike of up to about £400 on a new Ford Fiesta Zetec, which currently sells for just over £13,500.

That is in addition to an earlier warning that motorists face paying £1,500 more for imported cars when the UK leaves the EU if the divorce deal results in new tariffs.

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