The fears of persistent inflationary pressures vexing hawks at the Bank of England were eased yesterday by figures on price pressures in manufacturing that were better than expected.
The cost of goods leaving factories rose by a muted 0.2 per cent last month, below forecasts for a 0.3 per cent rise. Industry’s input costs for raw materials, fuel and components were also weaker than expected, rising by 0.6 per cent, rather than the 0.9 per cent predicted by the City.
The reassuring news came in spite of a surge in fuel costs last month, with the official data showing a 6.6 per cent June jump in crude oil prices for UK manufacturing, while the price of petroleum products made in Britain rose by 1.1 per cent.
However, the improved picture for producer prices in June still left their annual pace of increase close to highs for the past decade. Annual inflation for goods leaving factories was unchanged for a third month at 2.4 per cent. The annual pace of increase for input prices climbed to 2.1 per cent from May’s 1.3 per cent.