Factory gate is closed on rate cut hopes

Hopes of another early cut in interest rates from the Bank of England seemed dashed today as manufacturers said that their prices are rising to record levels.

The monthly index from the Chartered Institute of Purchasing & Supply slipped to 51 in April, meaning industry continues to expand, albeit slowly. But it was the pricing indices - both at their highest for at least 12 years - that worried economists.

Inflation is a major concern for the Bank when it fixes interest rates. "We've got very elevated pricing readings despite another slight moderation in growth," said Ross Walker at RBS.