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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/02/rates-pressure-as-factory-costs-up.jpg"><img class="alignnone size-full" title="Figures show factory costs rising at their fastest rate in more than two years" src="http://londonglossy.com/wp-content/uploads/2011/02/min-rates-pressure-as-factory-costs-up.jpg" alt="Figures show factory costs rising at their fastest rate in more than two years"/></a></p>
<p>The case for higher interest rates has intensified after figures showed factory costs rising at their fastest rate in more than two years.</p>
<p>The price of materials and fuel paid by UK manufacturers rose 13.4% on a year ago in January, according to the Office for National Statistics (ONS).</p>
<p>Factory bosses were successful in passing on some of the rise as the ONS said the price of goods leaving factories rose 4.8%, the highest since May.</p>
<p>Both sets of figures were stronger than City forecasts and highlighted the inflationary pressures that have brought calls for higher interest rates.</p>
<p>The Bank of England, which kept rates at a record low of 0.5% on Thursday, is due to publish its latest quarterly forecasts for inflation and growth on Wednesday. A day earlier, official figures from the ONS are expected to show that the CPI measure of inflation for January jumped to around 4.3%.</p>
<p>UK economist Samuel Tombs said: &#8220;January&#8217;s producer prices figures provide a timely reminder that, despite yesterday&#8217;s decision to keep rates on hold, the risk of a near-term hike in interest rates remains very much alive.&#8221;</p>
<p>Higher oil prices, driven by uncertainty in the Middle East following the recent political unrest in Egypt, caused the latest spike in producer prices, which rose 1.7% between December and January.</p>
<p>The price of Brent crude oil breached the 100 US dollars a barrel mark earlier this month and stood at 102 US dollars on Friday as Egypt&#8217;s president Hosni Mubarak clung to power despite continued street protests.</p>
<p>Mr Tombs said many of the factors currently pushing up inflation, such as the VAT rise to 20%, were temporary and it was right for the Bank of England to maintain its stance of keeping rates on hold.</p>
<p>&#8220;Nonetheless, today&#8217;s figures may add to concerns about the likely persistence of inflationary pressures,&#8221; he added.</p>
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