UK factory gate prices surge to 17-year high

The Bank of England is facing further pressure to control rising inflation after it emerged that core factory gate prices surged to 5.9 per cent during May - the highest increase since 1991 and far above the expected 4.7 per cent.

Annual core output prices, which strip out food, beverages, tobacco and petroleum, rose to a 17-year high while on a month-by-month basis increased by 1.2 per cent, according to the Office for National Statistics (ONS).

Including fuel costs, factory gate prices surged 8.9 per cent in the year to May - the highest since comparable records began in 1986 - while input prices rose 27.9 per cent in the year to May, before fuel prices reached a new high of $139 a barrel last Friday.

All ten categories saw prices increase on the year led by a 28.5% surge in petroleum products on the back of record oil prices, which have reached as high as $139 per barrel last week. As manufacturers continue to pass on costs to consumers, inflation will rise above the BoE’s 3% threshold, where it currently sits. Inflation has become a growing global concern, which has many speculating that the MPC may raise rates at their next policy meeting.