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Last Updated: Monday, 16 January 2006, 10:22 GMT
Rising costs hit UK manufacturers
Chemical manufacturing plant
Rising raw material costs are expected to have a limited impact
Raw material costs for UK factories rose at their fastest pace on record last month, official figures show.

The Office for National Statistics (ONS) said the price of goods entering factories rose by 0.9% in December.

The ONS, which started records in 1991, said the rise mainly reflected higher fuel and commodity prices.

At the same time, factory output prices fell 0.2% taking the annual rate to 2.4%, below economists' forecasts for a 2.8% increase.

However, with raw materials only accounting for about 10% of overall costs in industry, the latest figures are expected to have limited impact and should not affect interest rates.

"The sharp pick-up in inflation pressures evident in December's data is likely to be temporary and should not concern the [Bank of England] too much," said Jonathan Loynes of Capital Economics.

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