Factory gate prices add to inflation fears

David Prosser
Saturday 06 August 2011 00:00 BST
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Prices at the factory gate are rising at their fastest rate for three years, official data revealed yesterday, adding to fears the headline rate of inflation will climb further in the months ahead.

The Office for National Statistics said producer price inflation hit 5.9 per cent in July, up from 5.7 per cent a month previously. The latest rise was caused by another increase in the cost of raw materials and commodities, with input price inflation rising from 16.8 per cent to 18.5 per cent last month.

The Bank of England is due to publish its quarterly Inflation Report next week and is expected to caution again that consumer price inflation, currently at 5 per cent, has further to rise.

But economists said the rise in inflation between June and July was the slowest for several months, which at least means an end to rising inflation may now be in sight.

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