Inflation Troubles On The Other Side Of The Pond

Even on the other side of the pond, British manufacturers charged 10% higher last month than a year ago for their goods; a further sign of inflationary pressure in their economy.  This figure is the highest annual increase since 1986, the BBC News reports.

June’s rise in producer prices marked a further sharp jump from May’s 9.3% annual rise, official figures showed, reflecting the spiraling cost of fuel.  There is a danger that price increases could be passed onto customers, which would further boost consumer inflation.  Consumer price inflation is already at a 10-year high of 3.3%.

Bank of England Governor Mervyn King warned that inflation could surpass 4% later this year, due to the rising cost of fuel and food.  The Bank is having to combat the threat of inflation at the same time as the economy slows markedly. 

Output in both manufacturing and the service sector are weak, while the British Chamber of Commerce recently warned that the risk of a recession was increasing.

Figures from the Office for National Statistics showed that producer prices rose by 0.9% on a monthly basis between May and June, slightly lower than market expectations.  The amount paid by firms for raw materials in the country is 30% higher than a year ago.