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mpc: 9 commodity prices had been flat over the month and had been 3% higher compared with the previous year. The contrast between different types of commodities had continued: metal prices had risen further, whereas domestic food prices had fallen again. A41 Seasonally adjusted manufacturing input prices had risen by 0.7% in September to give 5.8% annual inflation. This had largely reflected higher oil prices. The latest CIPS survey input price index had risen to 56.2 in September, the highest for four years. The CBI Quarterly Industrial Trends output price expectations balance had strengthened further in Q3. Although cost pressures from materials had been mounting since early this year, output price inflation had remained subdued. A42 The latest CIPS services survey had shown a sharp rise in input prices in October, with the index rising to 59.2, its highest since May 1997. The survey had also indicated that average prices charged had risen for the first time in four months. A43 Export and import prices had risen by 1% and 0.6 % respectively in the three months to August. Stripping out the oil component, export prices had fallen and import prices had remained unchanged. A44 Comparing price inflation with weighted costs had suggested that retailers' and manufacturers' margins had fallen over the past year. The Euler Trade Indemnity Survey had indicated that competitive pressures had somewhat reduced respondents' profitability since early 1999. A45 RPIX inflation had remained at 2.1% in September. Whereas harvest-related seasonal food prices had risen on the month, non-seasonal food prices had fallen. The annual rate of change of the retail sales deflator had remained at -0.5% in September. This had mainly reflected falls in food and non-food store prices earlier in the year.

VI Reports by the Bank's Agents

A46 The Bank's regional Agents had reported a continued recovery in economic activity. Growth had continued to be driven mainly by domestic demand, although many firms had also reported a pick-up in export orders. However, although manufacturing output continued to rise, the recovery had been far from universal. Construction activity had remained strong. The service sector continued to record strong growth, although it had not increased further. IT activity had remained strong, as Y2K work had