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Saturday 11th of April 2009
April 10, 2009

Weaker pound slows factory price rise and narrows trade gap


by Peter Charalambous
”Weaker

The Office for National Statistics has said that a combination of lower oil prices and the value of the pound has meant that the price of goods leaving the UK has risen by the smallest rate for over a year and a half.

On a month-to-month basis, output prices have risen by just 0.1 percent. This has been helped by the fact that the cost of materials on their way to factories has fallen by 0.4 percent compared to last year.

The Consumer Prices Index saw a surprise rise of 3.1 percent two months ago as manufacturing and new orders are falling and so producers are passing off costs onto resale prices.

UK exports of traded goods, excluding oil, is up by 3.5 percent on a month-to-month basis, which has meant that the negative trend has ended, as the sharp fall in the value of the sterling has helped exporters.

Imports are even weaker than exports, especially over the next few months as domestic demand in the UK has stuttered, due to the impact of the recession.

The goods trade gap with countries outside the EU has narrowed as exports have suddenly increased and imports has slowed drastically.

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