Factory gate inflation still on the rise

Analysts had forecast a 5.9 per cent increase.

The Office for National Statistics said input prices fell 1.9 per cent on the month, a bigger drop than economists had expected, taking the annual rate of input price inflation to 16.2 per cent, the lowest since March.

The price of crude oil inputs fell by 5.9 per cent on the month, the biggest drop since May, although the cost of oil is still up 35.7 per cent on a year ago. There were also big annual rises in the costs of imported food, parts and equipment, and other materials.

The slowing pace of input price inflation may give some limited comfort to the Bank of England, which held interest rates at 0.5 per cent at its monthly meeting this week. But the central bank left open the possibility it may restart its quantitative easing programme should the economy weaken further.