Soaring food and petrol prices pushed British factory gate inflation to its highest level in nearly 12 years in October, denting expectations that interest rates are about to fall.
The Office for National Statistics said on Monday that output prices rose a non-seasonally adjusted 0.6 percent on the month, taking the annual rate up a full point to 3.8 percent -- its highest level since December 1995.
Analysts had predicted a 3.3 percent annual increase. The ONS also revised up September's figures and there was further evidence of inflationary pressure further up the pipeline.
Manufacturers' raw material costs rose by 1.8 percent in October, for an annual increase of 8.5 percent, the fastest annual pace since July 2006.
Sterling rose about a third of a cent against the dollar after the data which highlighted policymakers' concerns that inflation is still a problem.
"The Bank of England is worried about inflationary pressures and this sort of data will perhaps give them reason to pause before cutting rates in the new year," said George Buckley, an economist at Deutsche Bank.
The BoE has come under pressure to cut interest rates in response to continuing troubles in financial markets but held borrowing costs steady at 5.75 percent last week.
Experts are now waiting for this week's inflation figures -- consumer price data are due on Tuesday -- and new BoE forecasts to gauge the likelihood of a cut in the coming months.
The chief culprits for the strong rise in inflationary pressures are soaring food and energy costs. On the input side, crude oil prices were up 32.1 percent on the year in October even before the latest run up towards $100 a barrel.
Imported food inflation hit an 11-year high.
On the output side, the increases in fuel duty announced in this year's budget added 0.2 percent to the overall output price index, while food product prices rose at their fastest rate since August 1993, mainly due to higher dairy and wheat prices.
Stripping out food, drink, tobacco and petroleum, the so-called core measure of output prices rose by just 0.3 percent on the month, for an annual rise of 2.3 percent.