Surging oil prices, as well as higher costs of imported equipment, caused raw material costs to increase by their highest annual rate in over 20 years in the year to July.
National Statistics revealed that input prices, on a seasonally adjusted basis, rose by 13.4 per cent in July from a year earlier, up from a rise of 12.5 per cent in June and well above analysts' expectations.
The latest figure is the highest since 1986.
On a non- seasonally adjusted basis, input prices rose by 13.5 per cent, the highest rate since February 1985, the statistics office said.
On a month- on- month basis, input prices rose by 1.8 per cent from June, down slightly on last month's rise of 2.6 per cent but again above expectations.
The rise reflects rises in crude oil, imported parts and equipment prices, with only slight falls seen in fuels and home produced food prices, NS said.
Crude oil prices rose by nine per cent between June and July and were up 57.2 per cent in the year to July. This is the largest annual rise since October 2000.
Imported parts and equipment prices rose two per cent between June and July, partly reflecting a 3.2 per cent rise in imported electronic components, including a 3.9 per cent price jump in imported electronic integrated circuits and micro assemblies.
There was also evidence, however, that manufacturers have been able to pass on some of these cost increases into their prices, which could raise concerns at the Bank of England about rising inflationary pressures ahead of tomorrow's quarterly Inflation Report.
The statistics office said output prices on a nonseasonally adjusted basis rose by 0.7 per cent between June and July. Analysts had predicted a drop of 0.1 per cent.
The monthly rise suggests that the pressure on profit margins could be lessening after two months of falls in output prices in May and June.
On a year-on-year basis, output prices rose by three per cent, compared with a 2.5 per cent rise in June.
Meanwhile, core output prices, which exclude food, beverages and petroleum, rose 2.3 per cent in the year to July on a seasonally adjusted basis, compared with a rise of 2.3 per cent in June.
On a monthly basis, core output was up 0.4 per cent, compared with forecasts for an unchanged rate and after a fall of 0.1 per cent in June.
"The combination of fairly broad-based and stronger than expected core output price inflation is another reason to expect the Monetary Policy Committee to proceed cautiously," said Ross Walker, economist at RBS Financial Markets.
"We continue to look for just one further reduction in base rates." The MPC cut rates by a quarter per cent last week to 4.5 per cent.