Factory Prices

Business, Legal & Accounting Glossary

Definition: Factory Prices

Full Definition of Factory Prices

Factory prices refer to prices charged for commodities that are picked up at a factory. Factory-gate price is essentially the manufacturer’s pricing of goods produced. This price is not inclusive of transportation costs. Increase of factory gate prices gives an indication of the inflation level in an economy. Factory normally refers to a building or plant where commodities are manufactured on a commercially viable scale. It may be noted that ex-factory means a seller owns produced commodities until those are picked up from the factory. Here the selling price is actually the cost of producing concerned goods.

Factory Outlet

A factory outlet is essentially a retail store. Here a manufacturer of a commodity directly sells their wares to the public via own branded shops. Nowadays online factory outlets are much popular among people.

Factory prices and global inflation in 2008

Inflation emerged as a major global scourge in 2008. Coupled with unemployment it has posed serious problems, even for developed nations. In August 2008 factory prices in the USA rocketed out of control. Rate of rising factory prices was highest in comparison to that of the last 27 years. This pointed towards a galloping rise in US cost of living figures. Effects of consistently high oil prices mostly fueled this hike in US producer prices. Oil price surge led to a hike in manufacturing costs of products like automobiles, clothing and prescription medicines. It may be further noted that consumers pay a price higher than factory prices since additional retailer costs like marketing, distribution and staffing enter into end price calculation.

Factory gate prices recorded a substantial decrease in August 2008 in the UK. This fall was highest in past 22 years. This decline in prices in the UK was attributed to comparatively low metal and oil prices in concerned period. However, concern plagued the UK economy on account of a sharp decline in the Sterling, which made imports dearer. Food prices also remained unabated in the UK until September 2008.

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Definition Sources

Definitions for Factory Prices are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 28th March, 2020 | 1 Views.