LONDON (Bloomberg) -- UK factories increased prices at the fastest annual pace since 1991 in November as companies passed on higher costs of food and oil, adding to inflation pressures in the economy.

Manufacturing output prices rose 4.5 percent from a year ago after a 3.8 percent gain in October, the Office for National Statistics said in London yesterday. Economists had predicted 4.2 percent, according to the median forecast of 27 economists surveyed by Bloomberg News. In the month, prices rose 0.5 percent, after gaining 0.6 percent in October.
Policymakers didn't have today's figures when they cut the benchmark interest rate for the first time in two years on Dec. 6 to curb economic damage from higher credit costs. The Bank of England said then that “upside risks” to prices remain as companies absorb higher energy and food costs.
“It's clear that inflation is going to go even higher,” said Samra Al Harthy, an economist at Standard Chartered Plc. in London. “The bank will pause next month. They may cut rates again in February.”
Factory-gate prices increased on higher costs of gasoline and food products, the statistics office said. Petroleum goods prices rose an annual 18.5 percent, the most since 2000, and food prices climbed 6.6 percent, the biggest gain since 1993.
-------------------Office supplies
DS Smith Plc., owner of the Spicers office products brand, said Dec. 5 first-half profit rose 23 percent after it pushed through price increases for cardboard boxes. The company said it plans to raise corrugated case packaging prices further in the first half of next year to offset rising energy, wood and waste paper costs.
Raw material costs rose 1.7 percent on the month and 10.3 percent on the year, as food and gasoline product prices increased. Crude oil reached a record $99.29 on Nov. 21, and traded at $87.73 yesterday in London.
Consumers anticipate the inflation rate to rise to 2.8 percent, a survey by YouGov Plc. showed last month, the most since the poll was first conducted two years ago.
Inflation accelerated to 2.1 percent in October, exceeding the 2 percent target for the first time in four months. The central bank's forecast show inflation accelerating in the first part of next year before slowing.
While two policymakers voted for a rate cut last month, Governor Mervyn King, Rachel Lomax, Charles Bean and Andrew Sentance expressed concern about inflation in the past month.
The bank reduced its benchmark rate to 5.5 percent on Dec. 6, citing “deteriorated” conditions in financial markets and “a tightening” of credit supply to consumers and businesses. Minutes of the decision, showing how policymakers voted, will be released on Dec. 19.
“Things are difficult for the bank right now, there are lots of conflicting signals,” said Rob Carnell, an economist at ING Groep NV in London. “I think we're going to see further easing though 2008, maybe another 75 basis points.”