British manufacturers' costs unexpectedly fell at their sharpest monthly pace in 18 months in July but were still nearly a third higher than a year ago, official data showed today.
The Office for National Statistics said that input prices fell 0.6 per cent on the month. Analysts had expected a 1 per cent rise but revisions to the back data meant input costs were still a higher than expected 30.1 per cent on the year.
The figures use average prices over the month, meaning the sharp slide in oil prices towards the end of July has yet to be fully factored in.
While lower oil prices may start to tame pipeline inflationary pressures in the coming weeks, headline inflation is still set to nearly more than double the Bank of England's 2 per cent target when July figures are released tomorrow.
Analysts say this will likely keep the BoE from cutting interest rates to revive a stuttering economy.
Non-seasonally adjusted output prices rose a weaker than expected 10.2 per cent on the year, although that was still the highest since the series began in 1986.
Core output prices, which exclude food, drink, tobacco and petroleum, rose 0.3 per cent on the month to take the annual rate up to 6.6 per cent. It was last higher in May 1981.
Separately, the ONS released data on trade which showed the goods trade gap with the rest of the world widened more than expected in June to £7.68 billion from £7.39 billion.
Reuters