UK factory price rises slow down

The factory price slowdown could feed through to consumer inflation

The price of goods leaving UK factories rose in March at its slowest rate for more than 18 months, data has shown.

The easing was mainly due to lower oil prices, said the Office for National Statistics (ONS).

Output prices rose by 2% over the year - the slowest annual rate of increase since July 2007 - compared with a rise of 3% seen in February.

Oil prices fell by 17.7% in the year to March, the ONS said, adding that the weak pound had also had an effect.

Output prices rose just 0.1% on a month-on-month basis.

The cost of materials going in to factories was down 0.4% on a year ago, compared with a 1.5% annual rise seen in February.

The figures have raised expectations that inflation will slow, after the Consumer Prices Index saw a surprise rise to 3.1% in February.

"With manufacturing output collapsing, producers are passing the falls in costs on in their selling prices," said Jonathan Loynes, chief European economist at Capital Economics.

"Output price inflation fell from 3% to 2% and recent surveys of price expectations point to bigger falls in the coming months."