UK factory gate inflation up, input cost growth slows

British factory gate inflation picked up to a 14-month high in February, but growth of manufacturers' input prices eased more than expected and for the first time since last July, official data showed on Friday.

The Office for National Statistics said annual producer output price inflation accelerated to 4.1 percent last month from 3.8 percent in January, the highest rate since December 2008 and bang in line with forecasts.

Input prices were 6.9 percent higher on the year, down from a downwardly revised 7.7 percent in January and below analysts' forecasts.

There was little market reaction to the figures, which are unlikely to alter policymakers' expectations that consumer price inflation will remain above the Bank of England's 2 percent target for some months, before falling back due to economic weakness following Britain's 18-month recession.

"Overall, nothing here to suggest that cost pressures will prevent consumer price inflation from dropping back sharply in time in response to the vast amount of spare capacity in the economy," said Jonathan Loynes at Capital Economics.

The ONS said the pick-up in output price inflation was broad-based across all categories but mainly due to a sharp rise in petroleum product prices.

The price of crude oil, which was 54.5 percent higher on the year, was the main upward contributor to the annual rate of input price inflation. An annual fall in fuel prices partly offset that effect, the ONS said.

Core output price inflation, which excludes food, drink, tobacco and petrol, picked up to 2.9 percent on the year, the highest rate since March 2009.

Core input price inflation accelerated to an annual 1.9 percent, the highest rate since April 2009.