Firms report rise in cost of raw materials

BRITISH firms have seen the first rise in the cost of raw materials for eight months due to rising oil prices and the weak pound which made imported goods dearer, official figures show.

The Office for National Statistics said producer input prices rose 0.1 per cent on the year last month, climbing from a 6.2 percent annual fall in September.

Factory gate inflation – the price of goods leaving factories – also accelerated, albeit no more than expected, with output prices up 1.7 per cent on the year in October, the highest rate since March and up from 0.4 per cent in September.

"The eye-catching figure is the big jump in input prices," said Philip Shaw, chief economist at Investec. "The report as a whole is a reminder that there is an issue with imported costs coming into the UK, particularly commodity-based price pressures."

Favourable statistical effects from an oil price spike in mid-2008 had helped cap input price inflation this year, but that is starting to wear off as prices pick-up again.