LONDON (AP) -- Sliding oil prices pushed British manufacturers' costs lower in November, official figures showed Monday, further stoking expectations that the Bank of England could cut its benchmark rate to an all-time low of 1.00 percent in January.
The Office for National Statistics said prices at the factory gate -- also known as output prices -- fell by 0.7 percent in November from the previous month. November's fall came on the heel's of October's record 1.0 percent decline and pushed the annual rate of increase down to a year low of 5.1 percent from 6.7 percent.
Meanwhile, manufacturers' raw material costs -- also known as input prices -- slid 3.3 percent in November, pushing the annual rate of increase down to 7.5 percent from 15.4 percent.
Analysts said the data further reinforces predictions that the Bank of England, which has already cut its benchmark rate by 3 percentage points in two months to 2 percent, could reduce interest rates a further percentage point at its next rate-setting meeting in January.
There was some disappointment though that the figures showed that core output prices, which exclude energy and food costs, actually rose 0.2 percent during the month, partly because of the fall in the pound. However, with the downturn set to be deep and prolonged, analysts said the core rate will likely fall soon too.
"Given that the manufacturing sector is facing its worst downturn since the early 1980s, core prices are likely to fall back in the coming months," said Paul Dales, economist at Capital Economics.
"These numbers support our view that the bank needs to cut interest rates even further to stave off the threat of deflation," he added.
