UK May factory gate inflation jumps to record high

British factory gate inflation hit a record level in May as firms' raw material costs surged at their fastest rate in at least 22 years, official figures showed yesterday.

The Office for National Statistics said output prices rose 1.6 per cent in May, taking the annual rate to a record 8.9 per cent.

Core output prices, which exclude food, drink, alcohol and tobacco, also surged by 1.2 per cent on the month, three times the monthly rate predicted by analysts, as scrap metal prices soared. That monthly rise was only last higher in March 1980.

The figures acutely highlight the Bank of England's dilemma as it confronts slowing growth versus rising inflation, and are likely to further dent expectations of any interest rate cuts this year. Nor were there any signs that factory gate inflation could soon ease as input prices continue to march higher to new record rates of inflation.

Seasonally adjusted input prices jumped 3.8 per cent on the month for an annual rate of 27.6 per cent, also the highest since comparable records began in 1986.