Looking towards the Bank of England meeting next month, I think it does in a way make a rate cut slightly more likely.

Sharda Dean, Schroders

This is the biggest monthly fall in fifteen years. Analysts had been expecting a 0.1% monthly rise after a 0.2% fall in December.

"The figures are softer than expected and due to a respite in the oil price but I expect it to rise again", said Richard Jeffrey, chief economist at ING Barings.

Year-on-year, output prices were 1.9% higher in January.

The Office for National Statistics figures also showed a 0.5% increase in raw material costs from December, after a fall last month of 4.2%.

The rise of input costs was due to higher prices for food and imported materials

Raft of data

"From that data, looking towards the Bank of England meeting next month, I think it does in a way make a rate cut slightly more likely because it does show there are still quite intense competitive pressures out," said Sharda Dean, UK and Eurozone economist at Schroders.

"So it does look like we'll probably see quite a good retail price figure on Tuesday as well."

The producer price figures are the first in a raft of economic data due this week which includes the latest UK retail sales, consumer prices, and jobs and inflation data which are all key indicators for the Bank of England when deciding interest rates.

Last week the Bank cut rates by 0.25% to 5.75%.