UK manufacturers' raw materials costs stayed fairly subdued in March, though firms were able to pass some of the large cost increases over recent months into output prices, with the core output measure recording its highest annual gain in six months, official figures showed. The office of National Statistics said input prices were up 0.3 pct in March from February on a seasonally adjusted basis, below analysts' expectations for a rise of 0.5 pct and after an unchanged reading in January. The monthly rise in input prices was mainly due to rises in crude oil and home produced food materials, which were partially offset by a fall in fuel costs, NS said. Electricity prices fell by 1.4 pct between February and March, the first monthly fall since March 2005, though the annual rise of 56.5 pct was the highest gain since records began in 1991, NS said. This was slightly offset by a 1.1 pct rise in gas prices over the month. On an annual basis, input prices rose by 13.2 pct in March, the lowest annual gain since October 2005 and in line with analysts' expectations. In February, input prices rose by 15.0 pct year-on-year. A second month of subdued gains in raw materials costs will come as some relief to rate-setters at the Bank of England, particularly given the sharp increases seen in previous months due to elevated oil and energy prices. Nevertheless, there was continued evidence that manufacturers have been able to pass some of the extra costs into their prices, as factory gate prices continued to rise after falling in the last three months of 2005. Between February and March, output prices, on a non-adjusted basis, rose by 0.3 pct, unchanged from the previous month's reading and in line with analysts' forecasts. The rise in output prices over the month mainly reflected rises in other manufactured products prices, which rose by 1.1 pct largely due to higher scrap metal prices, NS said. Tobacco and alcohol prices rose by 0.4 pct, while petroleum product prices were up by 0.3 pct. NS noted that output prices were affected by measures announced in this year's Budget to increase the duty on tobacco, which took effect from March 22, and on beer and wine, which took effect from March 27. On an annual basis, prices rose by 2.5 pct, after a 2.9 pct increase in February and marginally below analysts' forecasts for a 2.6 pct rise. The core rate rose by 1.9 pct in March from a year earlier, the highest annual increase since September 2005. The rate is above February's 1.8 pct reading and above analysts' expectations for another 1.8 pct rise. On a monthly basis, core output prices rose by 0.3 pct after a 0.2 pct gain the previous month and again above analysts' forecast for a 0.2 pct rise. This is also the highest reading since September last year. Investec economist David Page said the rise in input prices was slightly weaker than the market had expected due to slower rises in commodity and metals prices, but the headline output price number was relatively firm. The higher-than-expected rise in core output may also be of some concern, though the Bank of England is likely to remain "relatively sanguine" on the prospects for prices, as long as these rises are not feeding through into CPI inflation, he said, adding that there has been no evidence of this as yet.