LONDON (SHARECAST) - Factory gate inflation dropped to a six-month low in August as oil prices fell back.
The Office for National Statistics reported producer prices grew by 4.7% last month from 5% in July. Market predictions had been for an annual rise of 4.8%.
Inflation has been a thorn in the Bank of England’s side in recent months as it has stubbornly refused to fall and has led to calls for interest rates to rise to curb it.
"The Bank of England will probably be pretty happy with the August producer price data and the figures reinforce the belief that the Monetary Policy Committee will hold off from raising interest rates for some considerable time," said Howard Archer, economist at IHS Global Insight.
Producers kept prices on hold in the August,widening margins, as annual input price inflation fell to 8.1% from 10.8% and input prices fell by 0.5% during the month.
The fall in the price of crude oil knocked 0.3 percentage points off the broader index, though home-produced food materials costs rose 1.4% as wheat prices soared.
