Rise in industry's input costs fuels inflation worries

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The price of materials and fuel paid by UK manufacturers rose at an annual rate of 13.4% in January, according to the Office for National Statistics.

It means input costs rose at their fastest for more than two years and are above forecasts of a 12.6% annual rate.

Prices of goods leaving factories rose 4.8%, the highest since May, and also above forecasts for a rise of 4.4%.

Analysts said the figures underlined inflationary worries and may make an interest rate rise more likely.

The ONS said the rise in input prices was mainly due to a 28.8% annual increase in the price of crude oil. But imported raw materials such as metals was also a factor.

The data suggests that next week's consumer price inflation figure will show a rise, also driven by January's rise in VAT.

Alan Clarke, economist at BNP Paribas, said that it looked like inflation was becoming "engrained", adding: "It reinforces the case for higher rates."

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