–Mar producer output prices +0.9% m/m; +5.4% y/y
–Mar core producer output prices +0.4% m/m; +3.0% y/y
–Mar producer input prices +3.7% m/m; +14.6% y/y

LONDON (MNI) – Headline output price inflation continued to rise
in March, as higher petrol prices pushed it to its highest level for
nearly two and a half years, figures released by National Statistics
showed Friday.

Output prices rose 0.9% on the month in March and were up 5.4% on
the year, the highest annual increase since October 2008. Analysts had
been expecting a smaller 0.6% monthly increase and an increase of 5.1%
on the year.

The figures will add to growing fears over the short-term path for
inflation and increase the likelihood that consumer price inflation will
hit 5% over the coming months as output prices feed up the supply chain.

Bank of England Governor Mervyn King has stated recently on a
number of occasions that there is little the Bank of England can do to
halt a rise in inflation in the short term caused by increasing
commodity prices such as oil.

Comments from more hawkish members of the Monetary Policy
Committee, including Andrew Sentance and Chief Economist Spencer Dale,
have shown growing concern over the continuing high level of inflation
and highlighted the risk that this could spill over into higher
expectations of inflation in the future.

Petroleum product prices rose 3.9% between February and March and
were up 17.9% on the year. The monthly increase was mainly due to an
increase in the price of petrol in spite of a decrease in fuel duties.

There was also upward pressure from alcohol and tobacco where
prices rose 1.2% on the month in March. While this partly reflected
increased duties announced in the Budget, National Statistics said it
also represented a general rise in prices.

Food prices also continued to rise, increasing by 0.5% on the month
and by 7.4% on the year, due to widespread price increases across a
range of products.

A massive increase in input prices in March suggests there will be
further upward pressure on output prices over the coming months.

Input prices leapt 3.7% on the month and were up 14.6% on the year.
Analysts had expected to see a smaller 2.1% monthly increase and a
rise of 12.6% on the year.

The latest increase was mainly due to a 9.8% hike in the price of
crude oil between February and March, the highest monthly gain since
March 2010.

There was also a 2.1% monthly rise in the price of imported parts
and equipment and a 2.2% increase in imported metals prices.

–London newsroom 4420 7862 7491 email: drobinson@marketnews.com

[TOPICS: MABDA$,M$B$$$,MT$$$$,MABDS$]