Monday evening business bulletin

Jun 16 2008 By Andrew Mernin

Oil prices jumped to a new record near US$140 a barrel today.

Light, sweet crude for July delivery reached 139.89 dollars on the New York commodity markets, a jump of more than four dollars after the greenback weakened in value and a fire halted production on a North Sea platform.

The surge came despite promises from Saudi Arabia over the weekend to boost output by 200,000 barrels a day next month - a move that was widely hoped to have reduced some of recent upward pressure on oil prices.

Analysts blamed the latest hike on the drop in the value of the dollar against the euro, making oil less expensive to investors dealing in other currencies.

Norwegian oil company StatoilHydro also halted oil and gas production on a 90,000-barrel a day facility after a fire broke out.

High street clothing firm Primark today said it had stopped buying clothes from three Indian suppliers after it emerged child labour was being used to finish the goods.

The factories had sub-contracted some finishing embroidery work to smaller firms in southern India who were using child labour, the company said. A six-month BBC Panorama investigation alerted Primark to the problems.

A statement said: ``As soon as Primark was made aware of the facts the company acted immediately, cancelling all new orders with the factories concerned and withdrawing from sale the embroidered garments involved."

Primark said the affected goods make up only 0.04% of its worldwide sourcing and that they have now been withdrawn from sale.

Further rises in fuel and food prices are expected to push inflation above 3% tomorrow - forcing Bank of England Governor Mervyn King to explain publicly how he intends to get the figure back down.

Most analysts believe the Consumer Prices Index (CPI) rose to 3.2% in May, the first time it has broken the 3% barrier since March last year.

A figure above 3% will result in an open letter to Chancellor Alistair Darling from Mr King explaining why inflation has risen more than 1% above the Government’s 2% target, and what the Bank is doing to bring the measure down.

It will be only the second letter of its kind since the Bank was granted independence in 1997, and is expected to cite the soaring cost of oil as one of inflation’s main drivers. Crude approached 140 US dollars a barrel earlier this month, a 40% rise during this year alone.

The pound at 4:30pm was US$1.9645 compared to US$1.9499 at the previous close while the euro at 4:30pm was £0.7883 compared to £0.7884 at the previous close.