Adam Cole of HSBC said worries about a cost-driven pick-up in inflation were a “further blow to any lingering expectations that rates will fall again in this cycle”.There was relief from figures on factory gate prices showing that industry was finding it hard to pass these costs on to consumers. Output prices rose 0.2 per cent in July to leave annual inflation at 1.1 per cent, in line with City forecasts.If food, drinks, tobacco and petrol are stripped out, the core figure showed a fall of 0.1 per cent on the month and 0.6 per cent over the year.”The output side of the figures was much more in line with what the markets expected,” said Jeremy Hawkins, economist at Bank of America. Annual inflation rose to 2.8 per cent, its highest since January 1996.
The Office for National Statistics said a 22 per cent rise in the cost of oil in one month sent the annual rate spiralling up to almost 70 per cent, the highest rise since records began in 1992. Prices of imported materials rose 2.6 per cent on the month, the steepest since April 1995.”The three-year-long period of input price deflation came decisively to an end in July,” said John O’Sullivan, an economist at Greenwich NatWest. Input prices rose by 3.3 per cent from June – three times the 1.1 per cent expected by the City and the highest rise since January 1980’s 4.5 per cent, figures out yesterday show.

A RECORD surge in the oil price last month sent the cost of raw materials rising at its fastest rate for almost 20 years, adding to concerns over interest rates. The FSA has refused to comment on the situation.Although Mr Humphries has not returned to work, he has been in telephone communication with Mr Sussex.Mr Humphries was unable to be contacted last night.. It is hoped that they will be removed in the next day or two and there is no question of the firm going under.No decision has yet been taken as to whether any further action will be necessary. Following the discovery, officials from the Financial Services Authority were called into the firm late on Friday night.John Sussex, head of Sussex Futures, is understood to have made good the losses from his own pocket so that the 40 traders will be able to resume work as soon as possible.The FSA yesterday imposed temporary trading restrictions on Sussex Futures.

Mr Humphries had used Liffe’s new electronic screen based system, Liffe Connect, to buy 1,100 lots of gilt futures, a large position for a bank let alone an individual.Traders said yesterday that the latest incident raised questions once again about whether electronic trading systems are sufficiently fool-proof to cope with volatile futures markets.The size of his loss was only discovered after Mr Humphries, an experienced floor trader who recently switched to screen-based trading, had left the office.Back office staff had earlier queried the size of the position, which far exceeded the limit authorised by the firm. The incident comes less than nine months after Griffin, a London futures clearing house, was brought down when trader John Park lost pounds 10m on German government bond futures.
Steven Humphries, who worked for Sussex Futures, was badly wrong-footed when the gilt market slumped on Friday after strong US employment figures. FORTY LONDON futures traders have been temporarily put out of business after a trader lost pounds 750,000 on Friday on a bet in gilt futures on the Liffe market. The cut in the intervention rate and output data spurred a bout of buying, but it ran out of steam and the benchmark index ended down 5 per cent to 668.21.
The central bank cut the three-month intervention rate from 6 to 5.5 per cent “The market anticipated 25 basis points This is a little big,” said an analyst..

A GLOOMY Malaysian market fell to three-month lows, brushing aside a decision to cut a key interest rate and robust industrial production figures. Analysts expect Chirocaine to generate annual sales of pounds 100m to pounds 150m at its peak Celltech Chiroscience’s shares closed up 11p at 500p.. The FDA has approved Chirocaine, a painkiller to be used mainly in childbirth and minor surgical procedures. The drug has already been approved in Sweden and other European countries are expected to make a decision on its approval by mid-2000. Gold closed in London at $256.90 an ounce, up from $255.80 on Friday..