Manufacturers have voiced fears that they face a squeeze on prices this summer.
Research by the Confederation of British Industry (CBI) showed that manufacturers expected the fall in domestic prices to gather pace in the next four months.
The CBI believes the economic downturn and the strength of sterling against the euro is causing firms to tighten their belts further.
Figures showed that 26 per cent of manufacturers thought their average prices would go down, while just nine per cent predicted an rise.
Sudhir Junankar, the CBI's associate director of economic analysis, warned the downturn in manufacturers' prices was set to gather pace, as competitive pressures in the home market tightened their grip.
The CBI added that order books were significantly below normal.
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