Dive in factory gate prices lifts hopes

Factory gate prices fell for the first time in 18 months in December, bolstering Bank of England hopes that the painful squeeze on living standards from inflation will ease sharply this year.

Yesterday's official figures showed output prices down 0.2 per cent, the first month-on-month slide since June 2010, as manufacturers passed on to customers the cheaper cost of raw materials. Input prices fell an even steeper 0.6 per cent, the Office for National Statistics said.