Official figures show that 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.
The Office for National Statistics said output prices rose 1.6% in May, taking the annual rate to a record 8.9%. Core output prices, which exclude food, drink, alcohol and tobacco, also surged by 1.2% on the month, three times the monthly rate predicted by analysts. The core rise was mainly due to soaring scrap metal prices.
The figures acutely highlight the Bank of England's dilemma as it confronts slowing growth and rising inflation. The data 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% on the month for an annual rate of 27.6%, also the highest since comparable records began in 1986.
