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UK factory gate prices see biggest rise since 2014 after Brexit slump in sterling
[LONDON] British factory gate prices rose at their fastest pace in over two years as the fall in sterling after the vote to leave the European Union pushed up import prices, creating inflation pressure ahead.
Producer prices rose by 0.3 per cent in July, compared with the same month last year, stronger than a median forecast in a Reuters poll for no change in the month following the referendum.
Consumer prices gathered a little bit of speed, rising by 0.6 per cent in July compared with a year earlier, their biggest rise since the end of 2014. Economists in a Reuters poll had expected a 0.5 per cent rise.
"There was no obvious impact on today's consumer prices figures following the EU referendum results though the Producer Prices Index suggests the fall in the exchange rate is beginning to push up import prices faced by manufacturers," Mike Prestwood, head of prices, at the Office for National Statistics said.
Britain voted to leave the EU on June 23 - a decision that could tip the economy into recession and which has also led to a sharp fall in sterling, driving up imports and input costs.
The Bank of England earlier this month cut interest rates for the first time since 2009, even as it raised its inflation forecasts for 2018 and 2019 further above its 2 per cent target.