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Saturday 22nd of January 2011
April 9, 2010    

UK producer prices up in March

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by Kay Murchie

The Office for National Statistics has today revealed UK producer output prices rose by 0.9% in March – nearly double the figure forecast by analysts.

Meanwhile, the annual rate hit 5% - the highest rate since November 2008.

The rise was attributed to higher oil and import prices and, according to analysts, could see the Bank of England raise interest rates sooner rather than later in order to control inflation.

Consumer price inflation is currently 1% above the Bank’s target of 2%.

Meanwhile, the figures sent sterling to a six-week high against the dollar of $1.5393, while it also rose against the euro to €1.1463

However, Howard Archer, chief UK and European economist at IHS Global Insight, comments: “The March producer price data may well increase wariness within the Bank of England’s Monetary Policy Committee that consumer price inflation could prove sticky over the coming months and not fall back as quickly or as far as expected.”

In other news this week, influential think tank, the National Institute of Economic and Social Research (NIESR), said the UK economy avoided a double-dip recession in the first quarter of 2010 and is expected to see growth of 0.4%.

However, official figures for quarter one GDP will not be published until April 23 but it appears many are optimistic for growth in the first three months of 2010.

Earlier this week, leading business group, the British Chambers of Commerce (BCC), said it had concerns for the UK economy but the recovery is “still on course”.

In addition, the Organisation for Economic Co-operation and Development (OECD) recently said the UK economy will outperform its G7 rivals in the second quarter of 2010.

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