THE rate of year on year price increases for new cars is slowing, indicating vehicle manufacturers are responding to the fall in consumer demand for new cars, claims Glass's Market Intelligence Service.

The average price of a new car rose again last month by 2.4 per cent an equivalent of £311.

But manufacturers still need to decide whether to absorb the sharp rise in steel and energy costs or pass them on to the consumer.

"We do not rule out the possibility of an acceleration in list price increases over the coming months," explains Adrian Rushmore, Managing editor at Glass's.

"If the new car market contracts further, these costs are unlikely to be passed on to the consumer."