Oil increases push up manufacturers' costs

www.ananova.com Ananova: 

Surging oil prices pushed manufacturers' raw material costs up last month, by the highest amount for more than two years.

Official figures show input prices rose by 2.8% in December, the sharpest jump since May 2000, as the cost of crude oil rocketed by 17.1%.

Fears over military action in Iraq, and the general strike in Venezuela, pushed crude oil above the key 30 US dollars a barrel mark over Christmas.

OPEC has agreed to push up oil production to cover the shortfall from Venezuela and bring prices back under control.

Stripping out the impact of oil, manufacturers' input prices fell by 0.1% in December, leaving a 1.4% decline for 2002 as a whole.

The Office for National Statistics added output prices, the price of goods leaving the factory gate, climbed by 0.1% last month, but annual growth was just 1.2%.

Simon Rubinsohn, chief economist at Gerrard, said the figures suggested manufacturers could be enjoying a little more pricing power.

But he conceded: "The best that can be said at the present time is that margins are not being eroded any further.

"This is hardly reassuring at a time when the slight improvement in the output trend already appears to be running out of steam."

Story filed: 12:42 Monday 13th January 2003