UK factory prices climb at fastest pace in over a decade

British manufacturers are hiking prices at the fastest rate in over a decade to offset a margin assault from soaring oil prices.

Prices charged at the factory gate are eight per cent higher than they were a year ago, the highest rate of inflation since September 2011, according to the Office for National Statistics (ONS).

Producer inflation was led higher by firms passing on sharp rises in crude oil prices in a bid to protect their bottom line.

Research from the ONS found crude oil prices have accelerated 88 per cent over the last year, driving prices for raw materials used by producers up to its highest rate since 2008.

Price gouging from producers will fuel concerns that inflation is becoming entrenched in the UK economy. 

Consumer goods manufacturers tend to use a lot of resources supplied by raw materials producers, meaning these firms will either have to swallow higher costs or pass them on to customers.

Separate figures released by the ONS today show consumer inflation is running at its highest level since December 2011 and is more than double the Bank of England’s two per cent inflation target.

Prices are 4.2 per cent higher than they were a year ago.