UK producer inflation at record

Manufacturers face rising costs

UK factory gate prices and producers' costs rose at a record pace in April, official figures showed.

The Office for National Statistics said that output prices for sales of manufactured products rose at a rate of 7.5% in the year to April.

Input prices rose 23.3% over the year. Input and output prices are at their highest since records began in 1986.

The data is likely to underscore policymakers' concerns about rising inflation as the economy slows.

Higher food and fuel prices accounted for the rise in input and output prices, along with increases in alcohol and tobacco duties following government tax changes.

The data came as the CBI said that small and medium-sized firms were struggling with high energy and raw material prices.

Retail pressure

The figures show that manufacturers are managing to pass on higher input costs to their customers, says the BBC's economics editor Stephanie Flanders.

However, she adds, the key question for the Bank of England is whether retailers will be able to pass them on to the final consumer - and so far, they have not been able to do so.

Analysts at Capital Economics said the higher cost of goods would not necessarily be passed on to consumers.

"We think that the consumer slowdown will mean that retailers will be forced to absorb the bulk of these cost increases in their margins," said Paul Dales, UK Economist at Capital Economics.

Consumer price index data for April is due to be released on Tuesday.

But Mr Dales added that the cost pressures could make the Bank of England's Monetary Policy Committee (MPC) more cautious on cutting interest rates.

"These data will maintain the MPC's reluctance to cut interest rates any faster."