Factory gate prices rise at record rate
Soaring costs of food, fuel and other raw materials pushed the price of goods leaving the UK's factories up by record levels last month, casting doubt on the prospect of another interest rate cut soon.
Output prices rose by 1.4% during April, pushing the annual rate up to 7.5%, the highest level recorded since the figures were first compiled by in 1986. The cost of raw materials also rose by a record level, increasing by 2.6% month on month and 23.3% year on year.
Even excluding food, drink, tobacco and petrol, inflation rose by rose by 1% in April and pushing the annual rate to 4.6%, up from 3.4% in March. The ONS said higher fuel prices accounted for much of the increase but there were also increases in alcohol and tobacco duties.
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A survey from the Confederation of British Industry this morning showed that firms are struggling to pass on the higher input costs. In the three months to April, 51% of 419 firms surveyed by the CBI said their average unit costs had gone up. Only 7% said they had decreased.
"Energy costs are really beginning to bite," the CBI's deputy director John Cridland told reporters. "It's raw materials prices as well, particularly in the metals industry, and food input prices," though he added some manufacturers were benefiting from a weaker pound and strong growth in Asia.
