In the latest release from the Office for National Statistics, the Producer Price Inflation (PPI) data for the UK in July 2023 has been published. The PPI measures changes in the prices of goods bought and sold by UK manufacturers, including both input prices (materials and fuels purchased) and output prices (factory gate prices).
Main Points:
- Producer input prices fell by 3.3% in the year to July 2023, marking a further decline from the 2.9% fall recorded in June 2023.
- Producer output (factory gate) prices also saw a decrease, falling by 0.8% in the year to July 2023. This comes after a slight rise of 0.3% in the year to June 2023.
- On a monthly basis, producer input prices decreased by 0.4%, while output prices experienced a slight increase of 0.1% in July 2023.
- The most significant downward contributions to annual rates of input and output inflation were provided by inputs of crude oil and petroleum products, respectively.
- Although annual producer price inflation rates have turned negative due to falling prices in certain sectors, the index levels for both input and output prices remain notably higher than their 2021 levels.
Input Producer Price Inflation:
- The annual inflation rate of producer input prices decreased from a fall of 2.9% in June 2023 to a fall of 3.3% in July 2023. This represents the lowest annual rate since May 2020.
- Monthly producer input inflation decreased by 0.4% in July 2023, following a decrease of 1.3% in June 2023. The monthly rate has been negative for seven of the last nine months.
- The largest downward contribution to the annual input inflation rate in July 2023 came from inputs of crude oil, which contributed 3.39 percentage points.
- Other significant contributors to the downward trend were inputs of metals and non-metallic minerals, and inputs of other produced materials.
Output Producer Price Inflation:
- The annual inflation rate of producer output (factory gate) prices decreased by 1.1 percentage points from 0.3% in June 2023 to a fall of 0.8% in July 2023. This marks the first negative annual rate since December 2020.
- Monthly producer output inflation increased slightly by 0.1% in July 2023, following a decrease of 0.2% in June 2023.
- The largest downward contribution to the annual output inflation rate in July 2023 came from refined petroleum products, which contributed 4.74 percentage points.
- However, food products and other outputs from manufacturing provided offsetting upward contributions to the annual output inflation rate.
Overall Trends:
- Despite the negative annual inflation rates, the index levels for both input and output prices have remained relatively high since July 2022.
- The decline in annual inflation rates in recent months has created a fall in the overall annual inflation rate, although index levels remain elevated.
This data provides insights into the current state of producer price inflation in the UK, indicating shifts in input and output prices across various sectors. The report highlights the impacts of changing global market trends, with some sectors experiencing significant price decreases while others contribute to the inflationary pressures. The analysis helps policymakers, businesses, and economists understand the dynamics of price changes within the manufacturing sector. The next release of the data is scheduled for 20 September 2023.