The Bank of England is under further pressure after the sharpest rise in factory gate price inflation for 16 years.

An increase in fuel and food costs in November saw prices soar at their fastest rate since 1991.

The stronger-than-expected 0.5% jump brings price inflation to 4.5% in the year to November - the largest hike since August 1991, according to the Office for National Statistics.

It comes after Bank of England policymakers voted to cut interest rates for the first time in more than two years this month.

Experts are warning the new figures will prevent borrowing costs being cut further in the near future.

Royal Bank of Scotland economist Ross Walker said: "Factory gate inflation soaring to its highest level for over a decade and a half is a significant concern.

"It corroborates the evidence of price pressures in the survey data and should help to prevent more aggressive policy easing in the near term."

Between October and November, petrol rose by 3.7% as oil prices soared above 99 US dollars per barrel, adding to the inflationary pressures.

Manufacturers' input costs saw a 1.7% increase between October and November, as the higher oil prices fed into gas prices in the UK and Europe.

Annual food inflation also rose to 6.6% in the year to November - the highest rate of increase since July 1993 following a near-4% rise in the price of bread, cakes and pastries last month.

It comes as 200 companies in a Lloyds TSB poll indicated that further cuts in interest rates will be needed to reverse the "gloom" as optimism among UK businesses plummeted, fuelled by a "significant" weakening of confidence in the service sector.

The firms said the recent rate cut needs to be the first in a series of reductions to mitigate any future economic slowdown.

But a Lloyds TSB spokesman said the MPC is still mindful of inflation, and so these cuts may not come as quickly as firms want.

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