LONDON, May 12: British economic data published on Monday has heightened inflation worries, reducing the prospect of a fresh interest-rate cut by the Bank of England in June, analysts said.

The British central bank, whose chief task is to keep inflation under control, held its key short-term interest rate last week at 5.0 per cent as it balanced slowing economic growth with building inflationary pressures.

The cost of goods leaving British factories jumped in April to a record high on the back of rising costs for raw materials, according to official data published on Monday.

The Office for National Statistics (ONS) added in a separate release that Britain’s trade-in-goods deficit with the rest of the world narrowed in March from February.

“Sharply higher producer price inflation in April highlights why the Bank of England was unwilling to enact a back-to-back interest rate cut last week,” said economist Howard Archer at the Global Insight consultancy in London.

He added that the data “raises serious questions as to whether the bank will be willing to cut interest rates from 5.0 per cent to 4.75 per cent as soon as June, despite current signs that the economic downturn may be deepening and widening.”

In May, the BoE’s rate-setting Monetary Policy Committee (MPC) ruled out a back-to-back rate cut to help stimulate economic growth amid stubbornly high inflation which partly stems from record high crude oil prices.

The ONS said on Monday that producer prices rose 1.4 per cent in April from March. They increased by 7.5 per cent in April compared with 12 months earlier.

The increase reflected higher costs for manufacturing, tobacco, alcohol and petrol products. Both rates of output price growth overshot market expectations and were the highest since records began in 1986.

Input costs, or the cost of raw materials, for producers surged by a record 23.1 per cent in April, compared with 12 months earlier.—AFP