Flat factory-gate prices and a six-year low in inflation figures out this week have raised hopes of further interest rate cuts.
Inflation dropped to 2.1% in May, below the Government target of 2.5%. The Bank of England’s Monetary Policy Committee has a duty to try to reach the target, making an `inflationary’ interest rate cut more likely.
Output prices increased by 0.9%, with raw materials prices down 2.9% and wages running ahead of manufacturers’ charges. The gap was partly made up by falling input prices, down by 2.9% over the year.