British factories face rising costs, reveals data

0 Comments 14 December 2010 0 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5, rated)

Britain's manufacturers suffered higher costs for production materials last month, stoking concerns about mounting inflationary pressures, analysts said.

Input prices rose by 0.9 per cent in November compared with October, the Office for National Statistics (ONS) said in a statement. That compared with market expectations for a gain of 0.8 per cent.

The large increase largely reflected higher prices for crude oil and fuels, according to the ONS. On a 12-month basis, prices surged by nine per cent last month compared with November 2009.

That beat forecasts for an 8.3-per cent increase and followed a hefty annual gain of 8.2 per cent in October. “November’s UK producer input price figures suggest that cost pressures in the manufacturing sector are still building,” said economist Samuel Tombs at the Capital Economics consultancy in London.

“The stronger-than-forecast figures will reinforce expectations that the Bank of England (BoE)will keep policy on hold for some time to come, as the economic recovery is weak but inflationary pressures remain a concern.”

Input prices had been scheduled for publication on Friday, alongside output numbers, but they were delayed because of concerns over possible errors. The ONS said on Friday that output costs the price of goods leaving factories — had slowed to 3.9 per cent in November, compared with the same level last year. That followed a larger increase of four per cent in October.

Britain awaits official inflation data for November to be published on Tuesday.

The Bank of England’s central task is to try and keep annual British consumer price inflation close to a government-set target of two per cent. However British annual inflation hit a four-month high of 3.2 per cent in October.

The BoE last week voted to keep its key interest rate at a record low 0.50 per cent, as expectations that Britain’s robust economic recovery will slow next year offsets the country’s high rate of inflation. BoE policymakers also decided to maintain the size of the central bank’s stimulus programme at 200 billion pounds.