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Monday, 8 May 2006, 11:04 GMT 12:04 UK

Factory prices threaten inflation

Finished goods on pallets Rising energy costs are feeding through the UK supply chain - pushing up prices and threatening inflation, the latest official statistics have indicated.

Manufacturers' raw materials bills rose at their fastest pace in nine months in April, hit by record oil prices, the Office for National Statistics said.

There was also a surprise hike in the prices they charged, which rose by 2.4% in the year to April.

Economists say the data could lead the Bank of England to lift interest rates.

"The (Bank of England's) Monetary Policy Committee is likely to become increasingly nervous that the pass-through effects from higher energy costs are a threat to the inflation target and is likely to signal that it is moving towards a hike in this week's Inflation Report," said Alan Clarke from BNP Paribas.

The ONS said that input prices - for raw materials such as fuel, chemicals, food and metals - rose 15.7% in the year to April, and by 1.9% in the month.

Core output prices, the prices that manufacturers charge for their goods - excluding food, drink, tobacco and petrol - rose by 2.3% in the year to April, and by 0.4% in the month.

The threat of avian flu had led to a big drop in poultry sales and a rise in the price of other meat products, the ONS added.



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