THE price of goods leaving factories rose last month as manufacturers moved to cover rising raw material costs, official figures show.

Prices charged by producers for their goods, excluding excise duties, rose by a higher-than-expected 0.5% in February, says the Office for National Statistics (ONS).

It compared with a fall of 0.2% in revised January figures.

The increase reflected hikes in the cost of alcoholic drinks and cigarettes, petrol products and other manufactured goods, the ONS said.

The cost of raw materials increased last month, although at a slower pace than in January.

The increase was a seasonally-adjusted 0.1%, against equivalent growth of 3.6% previously.

John Butler, of HSBC Bank, said manufacturers seemingly remained able to increase prices to protect their margins against rising costs.

He said one question critical to the future path of interest rates was whether this caused a squeeze on retailers' margins or helped increase inflation.

"Overall, these numbers support the view incorporated in the market that the next move in interest rates is up," he said.

Jonathan Loynes of Capital Economics said

retail goods inflation had continued to fall in recent months, suggesting that competitive pressures had forced retailers to absorb the pick-up in prices.

"Provided this continues, the main consequence of the rise in cost pressures looks likely to be a squeeze on companies' margins, rather than a significant pick-up in high street inflation," he said.