UK July factory gate inflation at eight-year low

British factory gate prices fell at their sharpest rate in almost eight years in July and input price inflation fell to its lowest in almost 23 years, suggesting consumer price inflation will ease rapidly, official data showed on Friday.

The Office for National Statistics said producer output prices fell 1.3 per cent on the year in July, the lowest annual rate since November 2001, but above forecasts for a 1.6 per cent drop.

Input prices, however, fell by a bigger-than-expected 12.2 per cent on the year, the largest decrease since September 1986, mainly due to a 41.0 per cent fall in crude oil prices. Oil prices also fell on the month, suggesting that inflation pressures have further to fall.

Excluding oil and food prices, output prices rose 0.2 per cent on the year, the lowest rate since June 2004, but confounding expectations for a 0.4 per cent fall.