Factory gate inflation picked up slightly in October but was lower than expected after the biggest reworking of the official data since 1992, figures from the Office for National Statistics showed.
The ONS said annual producer output price inflation picked up to four per cent in October from 3.8 percent in September, against forecasts for a reading of 4.4 per cent.
Annual input price inflation slowed to eight per cent from 8.7 per cent, despite a sharp rise in food prices. Analysts had expected a reading of 7.2 per cent. But the figures were higher partly due to the reclassification of the series.
The data are likely to reinforce the view that the Bank of England will be reluctant to inject any more stimulus into the economy while price pressures remain high and economic activity seems to be solid.
The ONS said it has reclassified the PPI series to be based on the 2007 style of industrial classification -- the first major reworking of the series since 1992. As a result, the 'recovered secondary raw materials' (mostly recycled metals) and 'publishing' components are no longer included in the manufacturing sector, but are classified under services – a different set of data that is published only quarterly.
The reclassification of output and input prices had resulted in large historical revisions dating back to 1996, but overall price trends are almost identical to the previous classification, the ONS said.
The ONS said that home produced food prices rose at their fastest annual pace since October 2008, up 9.8 per cent. Imported food prices rose 4.5 per cent on the year, the fastest pace since October 2009.
City A.M. Reporter