Output prices rise at fastest rate since 2008

Factory gate prices rise at their fastest rate since October 2008

Factory gate prices increased at their fastest rate since October 2008, Office for National Statistics figures show.

Manufacturers increased their output prices by 0.9 per cent between February and March, leaving them 5.4 per cent higher than a year ago, as they passed on the soaring cost of oil, food and other commodity prices, according to the ONS.

This led to record annual prices hikes for paper products, clothing, textiles and leather in March, while food was up 7.4 per cent year-on-year in its biggest hike since January 2009.

The higher-than-expected rate of factory gate price rises was announced the day after the Bank of England resisted pressure to hike interest rates from its record low of 0.5 per cent in a bid to beat down inflation.

Manufacturers are being forced to increase their prices to their customers after their input costs increased 14.6 per cent year-on-year, although this is slightly down on February's record high of 14.9 per cent.

Their input prices rose 3.7 per cent between February and March, mainly as a result of the rising cost of oil, which rose 10 per cent in the month.

Capital Economics economist Samuel Tombs said: "March's producer prices figures show that cost pressures in the manufacturing sector are continuing to build.

"Given the intensity of these costs pressures, then, it's not surprising that manufacturers are forcing through chunky price hikes.

"Oil prices are already another eight per cent or so higher this month, so further sharp rises in input prices seem unavoidable."

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