British producer price inflation rockets
Surging oil and food costs pushed up factory gate prices in the UK at their fastest rate for more than 16 years in January, official figures showed today.
The 0.7% rise brings producer price inflation to 5.7% in the year to January - the sharpest increase since August 1991, according to the Office for National Statistics (ONS) in Britain.
The figures add weight to the Bank of England’s warnings over inflation risks despite its quarter-point interest rate cut to 5.25% last week.
Howard Archer, Global Insight’s chief UK and European economist, said: “The January figures are really horrible and will likely send blood pressures higher at the Bank of England.
“The data reinforces concerns about inflation risks and further limits the scope of the Bank of England to cut interest rates aggressively to try and reduce the danger of a sharp economic downturn over the coming months.”
Manufacturers’ input costs also soared 18.9% over the year to January – the biggest annual increase since records began in 1986.
Oil prices rose by more than 70% over the year – the highest annual rate of increase since 2000 – while surging wheat costs have led to a 36% rise in food prices in the past 12 months. This is the biggest jump in prices for more than 20 years.
