Raw material costs show strengthening UK inflation
by Brian Turner
The rising cost of crude oil was cited as the biggest factor in the rise of raw materials prices that is adversely affecting industry in the UK.
Producer input prices went up 1.8 percent from June to July, showing an annual increase of 13.4 percent, the National Office of Statistics said on Monday.
It was the largest annual rate of increase in two decades. The rising cost of raw materials drove gate prices up by 0.7 percent in July, raising the annual rate of gate inflation to 3.0 percent.
The annual rate was 2.5 percent in June, and was expected to be only 2.4 percent in July. Additionally, it exceeded the Bank of England’s target of 2 percent.
These increases, according to analysts, create concern that manufacturers will find it more and more difficult to absorb input costs, which could work to increase inflationary pressures and consequently prevent the Bank of England from cutting interest rates again in the near future.
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