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Last Updated: Monday, 13 February 2006, 11:36 GMT
Factories pass on fuel cost rises
Worker counting oil drums
Surging crude oil prices are now filtering through to the consumer
Rising raw material costs prompted a higher than expected jump in factory gate prices last month, Office for National Statistics (ONS) figures show.

The 0.4% increase in output prices pushed the annual rate of increase up to four-month highs of 2.9%.

The jump was mainly driven by petrol product price rises as producers passed on crude cost increases, the ONS said.

The price of goods entering factories rose at a faster-than-expected 1.8% in January and 15.4% on the year.

Higher than average energy costs - as a result of rising crude prices - were behind the surge, the ONS said.

Energy costs

Electricity prices rose at their fastest annual rate since records began in 1991 - jumping by 50.1%.

Meanwhile, gas prices dipped slightly - but remained more than 90% higher then at the same period last year.

Experts warned the figures could reinforce concerns that inflationary pressures from fuel prices have not eased, which could lead the Bank of England to delay interest rate cuts.

"We are starting to see signs of output prices (albeit to a limited extent) catching up with input prices," BNP Parisbas UK economist Alan Clarke said.

"In turn this implies firms are clawing back pricing power, as the burden from input costs rises ever higher," Mr Clarke said. "The MPC will remain on alert for second round effects, though this is likely to centre on earnings growth."

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