UK manufacturers push up prices

Inflationary pressures appear to be increasing

The price of UK manufacturers' products rose at the fastest pace for more than eight years in February, a survey says, adding to worries over inflation.

The Chartered Institute of Purchasing and Supply (CIPS) said its output price index for manufacturers hit its highest level since the survey began in 1999.

The index rose to 59.9 in February. Any reading over 50 indicates growth.

Analysts said the findings meant that the prospect of a cut in UK interest rates this week had receded.

The Bank of England will announce its latest rate decision on Thursday.

The Bank cut rates to 5.25% in February from 5.5%.

Most analysts expect more interest rate cuts later this year, but the Bank's monetary policy committee (MPC) is also concerned about rising inflationary pressures in the UK economy.

The CIPS survey showed that manufacturers were still facing rising costs for their raw materials, with the input prices index rising from 69.7 in January to 72.2 last month - the highest level since November 2004.

The overall activity index edged up to 51.3 in February, from 50.7 in the previous month.

"This report fits with the flavour of other recent indicators - that activity isn't particularly good and the risks are of worse news ahead," said Alan Clarke, an economist at BNP Paribas.

"However, with inflation-leading indicators heading in the wrong direction this is going to make it very hard for the MPC to step up the pace of interest rate easing in the very near term."