MANUFACTURERS were under pressure last month, after raw material costs rose and the price of goods fell.

Factory gate prices fell by 0.2 per cent between April and last month, compared with a rise of 0.7 per cent the previous month. It surprised analysts, who had predicted a small increase.

Figures released yesterday by the Office for National Statistics showed the situation worsened as the cost of raw materials rose by 0.3 per cent at the same time, despite predictions of a fall.

John Butler, economist at HSBC, had expected factory gate prices to rise by 0.2 per cent.

He said: "Today's data may be the first indication that manufacturers' margins are now set to share some of the strain."