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UK trade gap steady in Jan, import prices leap

LONDON - Britain’s goods trade deficit held broadly steady in January while core import price inflation rose at its fastest rate in around 15 years, official data showed on Wednesday.

The Office for National Statistics said Britain’s goods trade gap with the rest of the world was 7.503 billion pounds ($15.11 billion) in January, in line with economists’ forecasts and virtually unchanged from the previous month.

There was a sharp rise in the price of imports, probably reflecting sterling’s weakness on the foreign exchanges and higher raw material costs.

The import price index excluding oil and erratics jumped 2.2 percent on the month, the fastest rate since July 1993.

The figures provide further evidence that price pressures are increasing, highlighting the dilemma faced by the Bank of England as it juggles the risk of a slowing economy with rising inflation.

Data earlier this week showed manufacturers are having to deal with the sharpest annual rise in input costs since records began 22 years ago.

The goods trade gap with non-EU countries widened a fraction to 4.292 billion pounds from an upwardly revised 4.112 billion pounds in December.

“The trade numbers do provide some cause for concern but we would hope to see some narrowing in the deficit as sterling’s weakness starts to benefit export markets,” said David Page at Investec.

There was a modest deterioration in Britain’s surplus on trade in services, which fell to 3.40 billion from 3.42 billion in December.

The statistics office said total exports of goods in January rose by 6.5 percent to 20 billion pounds and total imports of goods rose by 4.5 percent to 27.5 billion pounds.