Sky-high oil prices left their mark on the manufacturing sector in May by helping to drive up the cost of raw materials by 1.6 per cent.

The increase will fuel worries that inflationary pressures are building in the economy and may encourage the Bank of England to hike interest rates more aggressively in future, economists said.

Data from the Office for National Statistics showed that input costs rose by 5.3 per cent over the past year.

This was in line with the expectations of analysts and almost entirely due to the 13.6 per cent hike in oil prices over the past month amid fears of supply shortages and terrorism.

But they said underlying pressures remained low with import costs continuing to fall, helped by the high level of sterling and the influx of cheap goods from developing countries.

Manufacturers have also been able to take costs out of their business through cuts in their workforce.

HSBC economist John Butler said there was "little sign yet" that the higher costs of raw materials were rapidly squeezing through the supply chain.

At the factory gate, prices were 2.4 per cent higher in May than a year ago and ahead of the 1.8 per cent increase in April.

But, after stripping out rises in petrol and goods such as food and tobacco, annual core price inflation remained relatively stable at 1.4 per cent last month.