Raw material prices rise sharply

Manufacturers have been hit by rising oil prices

Raw material costs for UK manufacturers rose at their sharpest rate for more than two years in September.

Rising oil prices helped to drive up input prices by 3.2% in September alone and 6.4% on the year, said the Office for National Statistics.

The figures are a sign that inflationary pressures remain, and will likely deter the Bank of England from reducing interest rates.

The fear is manufacturers will pass on their rising prices to consumers.

Wheat prices

Another reason for the rise in raw material prices was the higher cost of foods, such as wheat.

"These figures are a touch stronger than expected and there is nothing here that suggests the Bank of England will cut rates in November," said George Buckley, an economist at Deutsche Bank.

Despite rising prices, manufacturing, which has been growing extremely slowly, had a better month in August with output rising 0.4% on the month.

"If the service sector's contribution to growth fades amid the current financial market dislocation, the moribund showing of the manufacturing sector would not augur well for overall activity," said Daragh Maher of Calyon Crédit Agricole.