World Business

UK March factory gate inflation hits 16-month high

(Agencies)
Updated: 2010-04-09 17:15

LONDON: British factory gate inflation rose in March at its fastest pace in 16 months, driven by a surge in the cost of oil and a variety of imported goods, official data showed on Friday.

The Office for National Statistics said producer output prices rose 0.9 percent on the month, more than twice the jump analysts had forecast, for an annual rise of 5.0 percent - its highest since November 2008.

The rise was led by petroleum products, which added more than two percentage points to the annual rate and are up by a quarter since a year ago, far more than any other category.

The rise in input prices was also dominated by higher oil costs. Input prices rose 10.1 percent on the year, up from 7.5 percent in February and the biggest annual jump since October 2008.

Higher crude oil prices accounted for around 95 percent of the annual rise in input costs. On the month, crude oil prices were up 9.7 percent and the cost of imported metals rose by 5.3 percent, the highest since record for that category began in February 1991.

The figures may make concerning reading for the Bank of England (BOE) which has forecast that consumer price inflation -- currently running a full percentage point above the BOE's 2 percent target -- will fall back below target later this year.

Core producer output price inflation, which excludes food, beverages, tobacco and petroleum products, rose by an annual 3.6 percent, the fastest rate since February 2009.