Factory-gate inflation, linked to the amount manufacturers' charge for their goods, was 10% higher last month than a year ago, according to the Office of National Statistics.
This double-digit rise is the highest annual increase since 1986 and has been driven by a 30% hike in the amount firms pay for their raw materials and record oil prices.
Commentators are worried costs could be passed onto consumers who are already suffering, with consumer price inflation at a 10 year high of 3.3%.
Liberal Democrat shadow chancellor, Vince Cable says a damaging spiral of escalating prices and costs experienced in the 1970s and late 1980s could now be set in motion.
“Double-digit inflation involves crossing a very dangerous psychological threshold.
“In practice, the only fully reliable method of dealing with inflation is through the Bank of England changing interest rates.
“These terrible figures make it increasingly likely that the next movement of interest rates will be up and not down, with all that that means for those already struggling with interest payments.”
The Bank of England voted to keep interest rates at 5% last week in a bid to prevent a long-term pattern of wage-price spirals, but today’s figures will only put it under more pressure to raise rates in the coming months.IFAonline
Think tank report
Number of benefits
Alongside Barrett, Hopkins, Boston and Thorman on 17 October
For undisclosed sum