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Saturday 22nd of January 2011
January 14, 2011    

UK producer prices rise higher than forecast

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by Kay Murchie

The Office for National Statistics (ONS) today revealed producer output prices increased 0.5% in November on the month, after October’s 0.4%.

The forecast was for a rise of 0.4% and takes the annual rate to 4.2%.

According to RBS economist Ross Walker, it will make “uncomfortable” reading for the Bank of England and will raise concerns about “how fast retail and consumer price inflation will retreat in the second half of this year.”

Meanwhile, producer input prices for December were 12.5% on an annual basis - higher than the 10.4% forecast and represented the biggest annual increase since April.

The figures will increase pressures on consumer price inflation, which at an annual rate of 3.3% is way above the Government’s target of 2%.

The recent hike in VAT from 17.5% to 20% is also expected to drive inflation up to around the 4% mark over the coming months.

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