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UK producer prices leapt 10% a year

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Date: Monday 14 Jul 2008

LONDON (ShareCast) - Hopes that interest rates may start to fall some time this year took a knock Monday as news that UK producer prices surged last month heightened fears about soaring inflation.

Manufacturers hiked prices by 10% in June from the same time last year, the biggest annual increase since 1986 and up from 9.3% the month before, according to the Office for National Statistics.

The data reflects sky-high fuel costs that helped lift producer prices 0.9% between May and June, a little less than predicted. Soaring raw material costs boosted input prices by 30%.

Today’s news is worrying as the Bank of England looks to stave off a recession, while attempting to prevent inflation from getting out of hand.

Central bank governor Mervyn King has already acknowledged that consumer price inflation is likely to top 4% this year. It currently stands at 3.3%.

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