Business

UK producer price inflation falls back

Rover production line
Image caption A drop in oil prices contributed to a sharp slowdown in input costs faced by UK factories

The rates of increase in UK wholesale prices, and in the cost of inputs faced by British factories, have fallen back.

Producer price inflation, a measure of the price of goods as they roll off production lines, fell to 5.7% last month from 6.3% in September, the Office for National Statistics said.

Factory input prices also slowed, to 14.1% from 17.7% in September, thanks to falling oil prices, the ONS said.

The data is watched closely by the Bank of England's rate-setting committee.

The headline producer price inflation rate was the lowest since May and undershot market expectations for a 5.9% year-on-year rate.

The core rate of producer price inflation - which strips out volatile food and energy prices, giving a better indicator of long-term inflation trends - also fell, to 3.4% from 3.8% in September.

Meanwhile, the ONS also revised down its estimate of construction output in the third quarter of the year, to give an increase of just 0.2% as against a year earlier, compared with its previous estimate of a 0.6% rate.

The data, together with disappointing September trade figures released on Wednesday, add to the Bank of England's case for increasing its programme of quantitative easing - buying up more UK government debt in order to pump cash into the struggling economy - despite consumer prices inflation running at more than double the Bank's 2% target.

Related Internet links

The BBC is not responsible for the content of external Internet sites