Factory price inflation at near-three year high
Past rises in the oil price drove input costs at British manufacturers, the prices they pay for their materials, up 18.5pc in the year to July - the biggest jump since September 2008, said the Office for National Statistics (ONS).
The higher costs are feeding through into factory gate prices, the price tags factories put on their finished wares – which in turn could drive up the UK’s headline inflation further. Factories’ output prices rose 5.9pc in the year to July, up from 5.7pc the previous month and marking the fastest rate of inflation since October 2008.
“The increase will worsen the relentless squeeze faced by businesses as well as consumers,” said David Kern, chief economist at the British Chambers of Commerce.
High inflation combined with slow or stagnant growth – the UK grew just 0.2pc in the second quarter of this year – presents policymakers with the classic “stagflation” headache, as tackling the price problem could aggravate the growth issue.
Accordingly, Mr Kern said that since the factors pushing up producer price inflation are largely international, it would be a mistake to respond by raising UK interest rates. “Such a move could trigger an economic setback,” he said.
Source: Factory price inflation at near-three year high - Telegraph
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Can someone send link to this thread to Sir Merv?
tia
