Factory gate inflation hits three-year high

The price of goods leaving UK factories rose to a three-year high of 6.3 per cent raising doubts over the Bank of England’s belief that consumer inflation will slow next year.

The factory gate figure was largely driven by fuel and food inflation, according to the Office for National Statistics, but the core figure without those factors still rose to 3.8 per cent, its highest for a year.

In August the same figure was six per cent, and it had been expected to grow to 6.2 per cent this month.

Manufacturers' input costs rose by an annual 17.5 per cent, showing the pressure of rises in the cost of imported food, parts and equipment, all growing at their fastest annual rate in more than two years.



The Bank’s decision to carry out a second round of money printing was justified partly by a belief that consumer inflation would dip in early 2012, but the producer price inflation figures will raise fears that those rises will be passed on to consumer prices.