Factory gate inflation rate rises in December

Hike in oil prices cause a rise in inflation.

The price of goods leaving UK factories has risen due to an increase in oil prices, the Office for National Statistics (ONS) has said.

Annual producer output price inflation rose to 4.2%, compared with an upwardly revised 4.1% in November.

The 12.8% rise in petrol prices has caused concern over factory hikes being passed on to consumers.

"This is primarily an oil and commodity price effect," said Peter Dixon at Commerzbank

"It is going to raise pressure on the Bank of England [to raise interest rates] because output prices were up 0.5% on the month, which is quite a chunky amount."

Consumer price inflation (CPI) is running at 3.3%, way above the Bank's 2% target, meaning that everyday commodities are becoming more expensive to the average consumer. Retail price inflation - which includes mortgage interest payments - is currently 4.7%.