13 December 2005
British manufacturers are going through a torrid time at the moment, as costs surged last month but a highly competitive market kept output prices down.
Factory gate inflation, which is an indicator of the wholesale prices charged by manufacturers, fell to 2.3 per cent for the past year in November - its lowest for over a year and a half.
It would appear that consumers are being protected from bearing the burden of higher costs as, even though raw material prices to industry rose by 1.9 per cent in November, output prices across the manufacturing sector fell by 0.2 per cent, according to the Office for National Statistics.
Even if excluding volatile sectors such as energy, food and drink, and tobacco, factory gate prices actually rose by 0.1 per cent in November, the core annual rate of factory gate inflation stayed at only 1.3 per cent, its lowest level for nearly two and a half years.
The increase in costs in November was driven by a 40 per cent surge in the price of natural gas during this time but it is clear that the rising costs of commodities other than fuels are also having an effect.
Core input inflation, which includes metals, chemicals and other domestic inputs except for fuels, rose to an annual rate of 8.7 per cent in November.
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