Factory gate inflation lower than expected in January
British factory gate inflation dropped to its lowest in more than a year in January as input costs also rose at a much slower pace, data showed.
Output price inflation fell to 4.1 per cent from 4.8 per cent in December, its lowest annual level since November 2010, but the drop was smaller than economists had forecast, highlighting the risk that consumer price inflation may not fall as fast this year as the Bank of England is predicting.
Input price inflation slowed to seven per cent, down from a upwardly revised 8.9 per cent in December and the lowest annual rate since November 2009.
However, economists had expected a bigger dip in the year-on-year rate to 6.7 per cent.
The Bank of England forecast that consumer price inflation will tumble early this year from the current rate of 4.2 percent and dip below its two per cent target towards the end of 2012.
Some policymakers have flagged the risk that a renewed spike in oil prices could keep overall inflation up, and January’s data showed that a price rise in crude oil was the main driver behind the 0.5 percent month-on-month increase in input prices.