LASCOP

Output prices – the price tags manufacturers put on their products – rose 3.9pc in the last 12 months, after spiking 4pc in the year to October.

The annual inflation was driven by petrol prices, which accounted for 1 percentage point of the 3.9pc rise, the Office for National Statistics (ONS) reported.

However, the rate of inflation in petrol products, while still high at 9.8pc, was weaker than the previous month's 11.1pc figure and so slowed the overall rate slightly.

In the shorter term, prices rose 0.3pc month-on-month, a drop on October’s alarming 0.6pc rise but remaining "clearly inconsistent" with the Bank of England’s 2pc target for the annual rate, Samuel Tombs at Capital Economics said.

The official measure of annual inflation, the consumer prices index (CPI), climbed to 3.2pc in October.

However Bank policymakers on Thursday held off from raising interest rates to combat inflation, keeping the base rate kept at its record low of 0.5pc for a 21st month.

While their latest forecasts see inflation hitting 3.5pc in the first half of next year, Mervyn King, the Bank’s Governor, thinks spare capacity in the economy will rein in price rises in the longer-term.

The ONS postponed the planned release of the figures for input prices until Monday, citing “potential errors”, but economists expect the data to show another monthly rise.

“The likelihood is that there was a marked increase in input prices in November due to higher commodity and oil prices, so manufacturers' margins were squeezed increasingly in November,” said Howard Archer, economist at IHS Global Insight.

Separately, the Council of Mortgage Lenders (CML) reported double digit declines for house purchase and remortgaging in October.

Lending for house purchases fell 12pc year-on-year to £6.7bn, which was attributed to slumping house prices and a rush to take advantage of a stamp duty holiday a year ago.