Input prices surge for manufacturing as oil costs climb

17 January 2011
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17 January 2011 | Lindsay Clark

UK manufacturing input prices rose at an annual rate of 12.5 per cent in December, up nearly three points from the previous month.

This is the highest annual rate since April 2010, when the index rose 12.6 per cent, figures from the Officefor National Statistics (ONS) show.

While buyers struggle with higher input costs, the ONS data show output prices for the manufacturing sector rose 4.2 per cent on the year to December, illustrating the difficulty of passing on increases to customers.

The strongest influence on growing costs came from rising prices in crude oil, which hit 26.2 per cent annually, contributing 5.7 percentage points to the overall increase. The next largest contribution to the rise in costs came from imported metals, which made up 1.86 percentage points.

Although volatile commodities such as oil made the major contribution to increasing costs, the research revealed underlying price rises. For example, home-produced food prices rose by 3.4 per cent between November and December and by 11.3 per cent in the year to December.

Meanwhile, figures from Eurostat show euro areaannual inflation was 2.2 per cent in December 2010, up from 1.9 per cent in November, while EUannual inflation was 2.6 per cent in December 2010, up from 2.3 per cent in November.

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