British factory gate inflation rose in March at its fastest pace in 16 months, driven by a surge in the cost of oil and imported goods, official data shows.

The Office for National Statistics said producer output prices rose 0.9 percent on the month, more than twice the jump analysts had forecast, for an annual rise of five percent – its highest since November 2008.

“The producer price data may well lift speculation that interest rates could rise well before the end of the year,” said Howard Archer at IHS Global Insight.

The Bank of England has forecast that consumer price inflation – currently running a full percentage point above the BoE’s two percent target – will fall back below target later this year due to the large amount of slack in the economy.

While many economists still expect price pressures to ease over the year, some questioned whether consumer price inflation would fall as fast as the central bank hoped.

“I think there are genuine signs here that we will see a slower pace of deceleration in the CPI numbers than we thought previously,” said Alan Clarke, UK economist at BNP Paribas.

The rise in factory gate prices was led by petroleum products, which added more than two percentage points to the annual rate and are up by a quarter since a year ago.

Even excluding the direct effect of oil prices, factory gate inflation showed a marked rise. Core producer output price inflation, which strips out food, beverages, tobacco and petroleum products, rose by an annual 3.6 percent, its highest rate since February 2009.

There was also a sharper than expected jump in input price inflation, which rose 10.1 percent on the year, up from 7.5 percent in February and the biggest annual jump since October 2008.

Higher crude oil prices accounted for around 95 percent of that annual rise. On the month, crude oil prices rose 9.7 percent and imported metals were up 5.3 percent, the biggest monthly jump since records for that category began in February 1991.