Rocketing fuel expenses sent both manufacturers' costs and factory gate prices to record highs, dampening hopes of another interest rate cut next month as the Bank of England attempts to control inflation.

Manufacturers' costs soared at a record 20.4 per cent annual pace, while the cost of goods leaving factories rose at 6.2 per cent, the fastest for nearly 17 years, according to the Office for National Statistics (ONS).

Over the same period in the 12 months to March, the input price index, that monitors the costs that companies pay to manufacture their goods, accelerated primarily because of rising fuel costs. Last week, oil touched a record high of $112.21 a barrel.

The spike in manufacturing costs and pass-on effect of higher prices on British consumers makes it highly unlikely that the Bank of England's Monetary Policy Committee will reduce the interest rate again in May after cutting the borrowing cost by a quarter percentage point from 5.25 per cent to 5 per cent last week.

Consumers are also being hit by the full charges of the increased tax on tobacco and alcohol announced in the Budget last month.

Chancellor Alistair Darling increased duty on a bottle of spirit by 55p, on wine by 14p, on a pint of beer by 4p more and on a litre of cider by 3p. He also added 11p to tax on a packet of 20 cigarettes while a packet of five cigars became 4p more expensive.

Howard Archer, chief UK & European economist at Global Insight, said: "Going forward, the Bank of England will be desperately hoping that manufacturers' pricing power will be diluted by likely weaker activity and intensifying competition."

He said: "Ongoing elevated producer price inflation in March highlights the fact that the Bank of England cannot afford to relax on the inflation front and suggests that the Bank continues to have limited scope to cut interest rates — for now, at least.

"Nevertheless, we expect interest rates to come down by a further 25 basis points to 4.75 per cent in June unless there is a marked easing in credit conditions."

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