British producer prices strike two-year peak – official data

The prices of goods leaving British factories jumped to two-year highs in February, driven by rising food and oil costs, official data showed yesterday.

Producer prices leapt 5.3 per cent last month, compared with February 2010, the Office for National Statistics (ONS) said in a statement. That was the highest rate since October 2008, but was in line with market expectations according to analysts polled by Dow Jones Newswires.

The ONS added that prices rose by 0.50 per cent in February compared with January.

“Month on month, the output prices measure for all manufactured products rose 0.5 per cent between January and February, mainly reflecting price rises in petroleum, food and alcohol products,” it said.

The data was published one day after the Bank of England (B0E) held interest rates at a record low 0.50 per cent, as it opted against lifting borrowing costs to fight high consumer price inflation.

Rising output prices from producers will meanwhile put pressure on retailers to increase their own prices, which could push annual inflation even higher. Annual British inflation hit a two-year high of four per cent in January, double the BoE’s target level, on the back of surging oil prices and food bills. Since January, world oil prices have rocketed to their highest levels since late 2008, propelled by Libyan violence and spreading unrest in the Middle East and North Africa.