British factory gate prices rise 0.2%

The Office for National Statistics said that the price of goods leaving British factories rose an unadjusted 0.2% on the month in December to stand 1.8% higher than a year earlier. Analysts had predicted a 0.1% monthly rise.

Input prices, a measure of manufacturers' raw material costs, fell 0.2% in December from November and were up 1.9% year-on-year.

National Statistics said a 2.4% seasonal rise in fuel prices was offset by a 0.9% fall in imported parts and equipment prices.

Analysts said the figures indicate that manufacturers are beginning to nudge profit margins back up as the economy and demand improves.

The sterling's recent strength against the dollar improves profit margins for manufacturers through cheaper import prices.

Core output prices, which excludes food, drink, tobacco and petroleum product prices, rose 0.3% on the month for a 1.6% year-on-year gain.