Factory gate inflation in April was one per cent on the year, up from 0.5 per cent in March, according to figures from the Office for National Statistics.

But the rise was in part due to the effects of the March budget, which is estimated to have added around 0.3 per cent to the index. The underlying trend remains weak.

If food, drinks, tobacco and petroleum products are stripped out, prices were down 0.6 per cent on the year, compared with a fall of 0.5 per cent the previous month.

At the same time the cost of fuel and raw materials to industry rose by 1.6 per cent between March and April, reflecting a 22.2 per cent rise in the world price of crude oil which was only partially offset by seasonal fall in electricity prices.

Sales on Britain's high streets were flat in the past two months despite falling interest rates putting more money into shoppers' pockets.

The British Retail Consortium found like-for-like sales growth in March and April edged up 0.1 per cent, a virtual standstill, compared with the same period last year.

In contrast to recent surveys finding an increase in optimism among retailers and consumers, the BRC figures showed shoppers remained cautious when it came to actually spending their cash.

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