Factory gate inflation slows down

There has been a fall in prices for petroleum products

The cost of goods leaving UK factories in February rose at the slowest rate for 16 months, figures have shown.

Factory gate inflation fell to 3.1% last month, compared with 3.5% in January, according to the Office for National Statistics (ONS).

That is the lowest annual rate since September 2007. The fall was largely due to a drop in prices for oil and petroleum products, the ONS said.

Input price inflation also eased to 0.5% from 1.5% in January.

The ONS said a 37.8% drop in crude oil prices over the last year was the main reason for the lower prices paid by factories for raw materials.

On Thursday, the Bank of England cut interest rates to a new record low of 0.5%.

The data from the ONS justified the Bank's course of action, said Lloyds economist Kenneth Broux.

"The outlook is for a period of low interest rates," he said.