Manufacturing inflation rises in April
Monday, 12 May 2008 12:51
High oil prices are forcing up manufacturing costs
Manufacturing inflation rose in April, denting hopes of an interest rate cut next month.
In the year to April, home sales of manufactured products rose 7.5 per cent, compared with the rise of 6.5 per cent in the year to March, according to the Office for National Statistics.
The index rose 1.4 per cent between March and April as costs rose for producers.
If passed on in full, the changes to excise duty on tobacco and alcohol announced in the Budget would have increased the index by 0.3 per cent in April, the report added.
The price rises are linked to a sharp rise in the costs of materials and fuel, the data shows.
The input price index rose 23.3 per cent from last year, and 2.6 per cent from March, mostly because of high crude oil costs, according to the figures.
Oil is now over $125 a barrel, and an analyst has predicted that it could continue to rise to $200 a barrel.
As a result, inflation on petroleum products rose by 25.4 per cent in April compared to last year.
Food recorded the next highest jump, with a 9.3 per cent increase over the year.
The Bank of England takes inflation measures into account when it sets the interest base rate every month.
Many borrowers have been hoping for a reduction in the rate as the credit crunch continues to impact those with debts, but the bank has always emphasised that its job is to curb inflation, rather than assist the housing market.