Factory gate inflation rises on oil price

 
City A.M. Reporter
Factory gate inflation rose to its highest annual rate in more than two years in February, led by surging oil and food prices, official data showed.

The Office for National Statistics said producer output prices rose 0.5 percent on the month for an annual rise of 5.3 percent – up from an annual five per cent in January and the highest since October 2008.

Input prices rose an annual 14.6 per cent, also its highest rate since October 2008 in a sign that pipeline inflation pressures are continuing to build.

The figures were both in line with expectations but will still worry the Bank of England at a time when consumer price inflation is already double its two per cent target.

The Bank held interest rates at a record low of 0.5 per cent after its monthly meeting but investors are braced for a rise by the middle of the year, possibly as early as May.

A 33.5 per cent annual rise in oil input prices was the chief contributor to the rise in manufacturers' cost base. Food, imported metals and chemicals also exerted strong upward pressure.

On the month, crude oil contributed more than three-quarters of the total rise in firms' input prices