Fresh evidence that inflation pressures are still building in the economy has emerged as clothing and textile prices rose at their fastest rate since records began, causing UK producer prices to fall by less than expected in April. Clothing and textile prices rose by 4.6pc as core producer price inflation – which strips out volatile food and energy prices – soared to its highest level since September last year, at 3.4pc.
The pound rebounded from recent falls against the dollar on expectations that the Bank of England will have to address inflation by raising rates as soon as it considers the economy sufficiently resilient.
The cost of goods at factory gates rose by 0.8pc in April, the Office for National Statistics said, above expectations of 0.7pc. However, the 0.6pc month-on-month increase in core output prices was double the consensus forecast – indicating that rising costs are spreading across the economy.
"With much of this increase stemming from clothing, it indicates that retailers will face difficult pricing decisions as they balance higher costs with weak consumer spending," Andrew Grantham at HSBC said.
Input prices have risen 17.6pc on an annual basis, the ONS found, and output prices just 5.3pc – a small decline from the upwardly revised 5.6pc in March but still above forecasts. The sharp rise in input prices was a reflection of higher oil prices. (read more)
