UK producer prices come in below forecasts for December -UPDATE

Date: Friday 13 Jan 2012

The output price index for home sales of manufactured products fell by 0.2% on the month (4.8% on the year) during the month of December, according to the latest data out this morning from the Office for National Statistics (ONS).

That is the lowest annual rate since December 2010, when the index rose 4.2%. In November output prices increased at a 5.4% on year pace.

The consensus estimate was for a rise of 0.1% on the month (5.0% on the year).

The output price index excluding food, beverages, tobacco & petroleum rose 3.0% on the year, compared with a rise of 3.1% last month. This is the lowest annual rate since December 2010, when the index rose 2.7%.

For its part, the input price index retreated by 0.6% on the month (8.7% on the year), whereas the consensus had been expecting them to fall back by 0.1% on the month (9.1% on the year).

Input prices rose by 13.6% on the year in November.

Following the data Barclays Capital economist Blerina Uruci is explaining to clients that, “Producer prices fell across the board in December (…) Downward revisions to the data meant that this was the third consecutive monthly fall in core producer prices, indicating the emergence of a downward trend in core producer price inflation. Annual inflation has begun to show clear signs of easing. (…) The level of output price inflation remains high, and well above what would be consistent with hitting the target for CPI inflation. However, if this downward trend in pipeline inflation continues, it should help deliver the marked drop in CPI inflation that we expect to see during 2012."

AB

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