The construction industry struggled to grow in May, adding to signs that the economy was stagnant in the second quarter, while high factory-gate inflation pointed to further price increases for consumers. Weak growth, coupled with soaring prices, poses a deep dilemma for the Bank of England, which has opted to keep interest rates at record lows. It also undermines the government's efforts to slash a record budget deficit. Data from the Office for National Statistics on Friday showed that non-seasonally adjusted construction grew by just 0.4% in May after a hefty 12.4% drop in April caused by disruption due to the royal wedding that month. At the same time, annual factory gate inflation rose to 5.7% in June, its highest since October 2008, and soaring input prices for food and oil signalled further pressures were in the pipeline. Factory output recovered in May after a steep fall in April, mainly caused by an extra public holiday for the royal wedding. But unexpected oil field maintenance meant that industrial output as a whole failed to recover fully, prompting economic forecasters at think tank NIESR to predict just 0.1% growth for Q2.