Financial
UK factory inflation hits 14-month high
(TELEGRAPH) - So-called factory gate inflation rose by 0.3pc during the month, pushing the annual inflation rate to 4.1pc from 3.8pc in January, which was the highest level since December 2008. The monthly rise was slightly ahead of the 0.2pc increase expected by economists.
The prices manufacturers were charged for their raw materials – input prices – rose more modestly, by 0.1pc in February. This increase was largely driven by rises in the prices of imported parts, equipment and chemicals. The Office for National Statistics said the rises were largely offset by falls in the price of fuel and oil. Annual input price inflation eased more than economists expected, to 6.9pc from 7.7pc in January.
“The evidence suggests that manufacturers are trying to take advantage of some recent limited improvement in activity to push through price increases and support their margins in the face of recently rising input costs,” said Howard Archer, chief UK economist at IHS Global Insight. “Even so, manufacturers have only been able to pass on some of their higher costs with the result that their margins have been squeezed significantly recently.”
Consumer prices inflation, the official measure of inflation in the UK is currently at 3.5pc, significantly higher than the 2pc target. However, the Bank of England has repeatedly argued that the inflationary spike is temporary, and that it will ease later in the year.
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