Factory gate inflation is at a 12-year high -- suggesting retailers may have to hike prices in coming months to cope with higher costs.
Any risk of a pick-up in wage inflation and a slowing in workforce growth will worsen the headache for the BoE as it juggles the prospect of a weaker economy in the wake of the credit crunch against a less benign outlook for prices.
But increased immigration has also dominated headlines over fears that public services may not be able to cope.
Indeed, net migration is far from falling into negative territory and economists point out that inflationary problems can arise from a sustained increase.
"There are pressures on the infrastructure from a large amount of people flowing into UK which to an extent is also a cause of inflation -- in terms of housing for example," said Philip Shaw, an economist at Investec.
And if the economy weakens, weaker net migration may not have such severe wage implications as fewer jobs are created.
"Migration on the whole has been good for the UK economy," said Howard Archer, an economist at Global Insight.
"If migration slows that does have repercussions, but if you are expecting growth to slow anyway it may be that there isn't such need for incoming migrant growth anyway."
The Labour party apologised last month for underestimating the number of foreign workers coming to Britain over the last decade by 300,000.
Britain was the only big European Union country to let citizens of new member states work without restriction when the bloc added 10 mainly East European members in 2004.
In response to concerns over pressure on public services, the government decided last month to prolong migration curbs on Bulgarian and Romanian workers -- the most recent EU entrants.
(Additional reporting by Sarah Marsh)
