The Bank of England’s Monetary Policy Committee may be worried about inflationary pressures in the UK economy, but they will be hard-pressed to pin any blame on Britain’s manufacturing sector.
Figures out last week showed that output prices the so-called factory gate prices increased by 1% over the 12 months to March. This showed a slight upward movement over the year to February, with about 0.1% of the rise attributed to increases in excise duty on petroleum products.
But an even clearer picture of how tightly industry has kept the lid on prices is shown by another output index, which excludes some of the more variable or tax-related prices by not counting food, beverages, tobacco or petroleum.
This index rose by just 0.3% in the year to March which the Office for National Statistics reports is the lowest rate of increase since July 1967.
Meanwhile, the input price of materials and fuel purchased by manufacturing industry fell 1.6% between February and March, reflecting a drop in the price of crude oil and a seasonal fall in the costs of electricity charged to industrial consumers. Crude oil prices plummeted 35.7% in the year to March.