* UK output price inflation 4.7 pc y/y vs 5.0 pctin July
* Input prices unexpectedly fall 0.5 pct on month
* Oil pushes costs down but higher wheat prices a worry
(Adds further reaction, context)
By Christina Fincher and David Milliken
LONDON, Sept 10 (Reuters) - British factory gate inflation slowed more than expected to a six-month low in August after oil prices eased, but evidence that wheat prices are pushing up food costs clouded an otherwise rosy picture.
The Office for National Statistics said producer output price inflation slowed to 4.7 percent last month from an annual 5.0 percent in July. That was its fourth consecutive decline and the lowest rate since February.
Input price inflation slowed even more markedly to 8.1 percent from 10.8 percent in July -- well below forecasts of 8.9 percent and also a six-month low.
The figures will be welcomed by the Bank of England which has blamed the cost of imported commodities for contributing to the overshoot of consumer price inflation since the end of 2009.
On the month input prices dropped 0.5 percent, wrong-footing analysts who had expected a slight rise. The main downward contributor was crude oil which fell 1.3 percent on the month. However, the cost of home-produced food materials rose 1.4 percent, largely due to higher wheat prices.
"Although the moderation in the aggregate inflation rates may serve to dampen consumer price pressures, today's release highlights the incipient near-term threat from stronger food prices," said Simon Hayes, UK economist at Barclays Capital.
"As such, the degree of comfort the Monetary Policy Committee might take from these data is likely to be limited."
FOOD VS OIL
Global wheat prices have surged 60 percent since late June, driven up by supply shortages due to Russia's worst drought in 130 years. Sugar prices hit a six-month high on Thursday.
Producer output prices were unchanged on the month in August, with a rise in the cost of food offset by a fall in the cost of petroleum products.
The drop in fuel inflation was even more evident in the input price figures. Annual crude oil input price inflation more than halved to 11.8 percent in August -- its lowest since last October -- from 24.4 percent in July and a recent peak of 68.1 percent in December.
"As long as oil doesn't go through the roof we're looking for a further moderate deceleration in input price inflation going forward," said Peter Dixon, an economist at Commerzbank.
Consumer price inflation in Britain has eased steadily since hitting a 17-month peak of 3.7 percent in April but looks set to remain above the central bank's 2 percent target for at least another year. BoE Governor Mervyn King has admitted he has been surprised by the stickiness of inflation so far this year but is confident price pressures will ease over the medium term as one-off factors -- such as VAT changes and the pass-through effect from a weaker pound -- fade. Britain's central bank has kept interest rates at a record low 0.5 percent since March 2009 and is not expected to raise them until well into 2011. (Editing by Stephen Nisbet)