Factory gate price growth slips to 2007 low

09-07-2007

Factory gate price growth slips to 2007 low
Britain's manufacturing companies did not raise output prices as much as expected during June, official figures show.

Home sales of manufactured goods rose by 0.2 per cent in the year to June, "mainly reflecting rises in petroleum and food product rises" according to the Office for National Statistics (ONS).

This represents the lowest monthly advance of 2007, which has seen 0.4 per cent rises in every month except March's 0.6 per cent increase.

Although considered a forerunner of consumer price inflation – the government's preferred measure – Howard Archer of research firm Global Insight said the Bank of England was unlikely to take much notice of today's statistics when considering its August interest rate decision.

"It is really the future strength of consumer spending, wages and consumer price inflation that will determine whether or not interest rates reach six per cent," he said.

But he did say the lower-than-expected results for producer price inflation "may modestly alleviate the Bank of England's concerns about companies' pricing powers".

Consumer price index inflation currently stands at 2.5 per cent, having fallen from 2.8 per cent in April.


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