UK May factory costs dive on record oil, metals slide

British firms' input costs fell at their sharpest annual rate in 7-1/2 years in May as the price of oil and imported metals fell at a record pace, official data showed on Friday.

The Office for National Statistics figures also showed output prices weakening broadly in line with expectations, suggesting that inflationary pressures are continuing to abate as the global economic downturn persists.

The ONS said input prices fell 9.4 percent on the year in May, the steepest annual decline since November 2001, and lower than analysts' forecasts for a fall of 8.3 percent.

The decline was driven by record annual falls in oil and imported metals prices, which fell by 42.2 percent and 15.5 percent respectively.

The data also showed output prices falling 0.3 percent on the year, the biggest annual fall since June 2002. Core output prices were 1.2 percent higher than a year ago, the weakest annual rate since December 2005. Both readings were broadly in line with expectations.

The ONS said duty increases announced in April's Budget for petrol, tobacco and alcohol, if passed on in full were estimated to add 0.2 percent to the overall output index in April and a further 0.1 percent in May.