British firms' costs fell more than expected in August, while prices at the factory gate rose as forecast, official data showed today.
The Office for National Statistics said input prices fell 0.5 per cent in August, below analysts' forecasts for a 0.2 per cent decline.
That left the annual rate of input price inflation at 0.7 per cent.
Output prices rose 0.1 per cent on the month for an annual rate of 2.5 per cent, broadly as expected by economists. Core output price inflation also came in as forecast, up 0.2 per cent on the month for an annual rise of 2.4 per cent.
The ONS said the fall in input prices mainly reflected falls in crude oil, fuel and metal prices. But input price falls were partly offset by a rise in home-produced food prices, with the price of cereals affected by tight global supplies and the prospect of reduced yields because of wet weather.
The figures suggest inflation pressures remain under control and will likely reinforce expectations that interest rates have peaked.
The Bank of England left borrowing costs on hold at 5.75 per cent last week.