Manufacturers are experiencing their worst price pressure for nearly 30 years, a survey said today.

The latest CBI Industrial Trends survey showed that average unit costs rose for 65% of firms in the last three months, while they fell for just 7%.

The resulting balance of 58% is the highest reading since October 1980.

It comes in the wake of soaring oil prices, which reached a record 147 US dollars a barrel earlier this month. They have since fallen back around 10%.

More manufacturers are also expecting to put prices up than at any time since the lead-up to the last recession more than 18 years ago.

A balance of plus 34% of firms expect prices to rise over the next three months, the highest level since January 1990.

The CBI's chief economic advisor Ian McCafferty said: "Cost pressures on manufacturers have been noticeable for over four years but in the last three months they have been their most intense for nearly three decades.

"So it comes as little surprise that manufacturers are passing some of these higher costs onto customers although this is unlikely to rescue profits from a margin squeeze.

"The record oil price peaks in the last three months have pushed down further on business confidence and lowered firms' expectations for demand in the coming quarter."

The business mood about the overall situation darkened considerably for the fourth quarter in a row, the survey revealed, with a balance of 40% reporting less optimism compared to the previous three months. This is the worst reading since the aftermath of the 9/11 terror attacks in October 2001.

A balance of plus 58% of firms expect their costs to increase over the next three months, the survey showed.

The CBI headline reading relating to order book levels revealed that a balance of 8% of businesses reported a decline during July, compared to 1% enjoying a rise during the previous month.

For the first time in at least a year more manufacturers also expect their volume of output to decrease over the next quarter.

The balance of companies expecting worsening activity dropped to minus seven in July, down from plus 2% in June.

Firms also reported the weakest balances for domestic orders and export orders for at least five years, coming in at negative 21% and negative 8% respectively.

On the jobs front a balance of 27% of firms expect to cut jobs over the next three months, the worst reading since January '07.

Based on the results, the CBI forecasts that 10,000 jobs were lost in the second quarter this year with 26,000 expected to go in the third quarter.

This month marks the 50th anniversary of the CBI Industrial Trends survey, which is scrutinised by policymakers and analysts to gauge how the economy is fairing.

Howard Archer, UK economist at Global Insight, said: "The CBI industrial trends survey for July was markedly weaker and showed the now all too familiar and deeply worrying mix of slowing activity but still rising pressures."

He added that the data would do little to clear the "murky" interest rate outlook, as policymakers struggle with slowing activity and rising inflation.

"For now, we believe it is most likely that the Bank of England will sit tight for an extended period while it monitors both the upside risks to inflation and the downside risks to growth," Mr Archer said.