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U.K. factory-output prices and raw- material costs rose more than economists forecast in March, suggesting inflation pressures remain in the economy.
The price of goods at factory gates increased 0.6 percent from February, the Office for National Statistics said today in London. The median forecast of 20 economists in a Bloomberg News survey was for a 0.5 percent gain. Raw material costs rose 1.9 percent, exceeding a median estimate of 1.4 percent.
While Bank of England Governor Mervyn King maintains that the U.K. economy’s predicament still feels “like a crisis,” policy makers Martin Weale and Spencer Dale have shown concern about consumer-price growth slowing less than projected. Officials refrained last week from increasing emergency stimulus before new growth and inflation forecasts due next month.
“It all adds to the pressure to at least bring quantitative easing to a halt for now,” said Brian Hilliard, an economist at Societe Generale SA (GLE) in London and a former Bank of England official. “The signals on growth are still very weak. I don’t think the Monetary Policy Committee is going to have any serious concerns.”
The pound was little changed after the release, trading at $1.5920 as of 9:39 a.m. in London. The yield on the two-year government bond was also little changed at 0.396 percent.
Producer prices climbed for a third month, gaining in six out of 10 categories. The biggest increases were in petroleum products and tobacco and alcohol. From a year earlier, prices rose 3.6 percent, compared with a 4.1 percent gain in February, the statistics office said.
Core producer prices, which exclude costs of food, alcohol, tobacco and petroleum, rose 0.1 percent in the month and 2.5 percent from a year earlier.
In Asia, China’s growth slowed more than forecast last quarter to the least in almost three years, prompting economists to predict a rebound as Premier Wen Jiabao loosens policy to counter weak domestic and European demand.
Gross domestic product in the world’s second-biggest economy expanded 8.1 percent from a year earlier after an 8.9 percent gain in the fourth quarter, the National Bureau of Statistics said in Beijing today.
The cost of living in the U.S. probably rose at a slower pace in March as the run-up in energy prices lost steam, economists said before a report today.
The consumer-price index increased 0.3 percent last month after rising 0.4 percent in February, according to the median forecast of 80 economists surveyed by Bloomberg News. Core prices may have climbed 0.2 percent.
U.K. inflation slowed less than economists forecast in February as higher alcohol and food costs helped keep consumer- price gains above the Bank of England’s upper limit. Consumer prices rose 3.4 percent from a year earlier, the least since November 2010, compared with 3.6 percent in January.
James Halstead Plc (JHD), a U.K. maker of branded commercial flooring products, said on March 29 that raw-materials prices “remain relatively high” and that the company continues to face “challenging conditions.”
Input prices rose because of higher oil costs. They increased by 5.8 percent in March from a year earlier, the statistics office said.
A report last week by Markit Economics and the Chartered Institute of Purchasing and Supply showed that U.K. manufacturing growth unexpectedly accelerated in March to the fastest in 10 months as inflation pressures also increased. Manufacturers reported higher costs for electronic components, metals, oil, plastics and transportation in March.
In a separate report, the statistics office said construction output increased in February from the previous month, according to raw data unadjusted for seasonal swings. In the quarter through February, it fell 15.6 percent from the prior three months.
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