LONDON, Jan 25 (Reuters) – British manufacturers unexpectedly cut prices in December to the highest since April 2020, good news for the Bank of England which is assessing how much it needs to raise interest rates to fight against soaring inflation.
Producer prices fell 0.8% in December from November, the Office for National Statistics announced on Wednesday.
Input prices paid by factories fell 1.1% month-on-month, also the biggest drop since April 2020, when much of the UK economy came to a standstill at the start of the coronavirus crisis, the ONS said.
Economists polled by Reuters expected producer prices to rise 0.3% on a monthly basis and input prices to fall 0.6% month-on-month.
Britain’s main measure of inflation – the consumer price index – fell in November and December, but at 10.5% it is more than five times above the BoE’s target.
The central bank is watching for signs of future inflationary pressures. Investors expect the BoE to hike interest rates for the 10th consecutive time on Feb. 2, with most prices another half-percentage-point hike to 4%.
ONS producer price inflation data for November and December was released later than usual after the statistics office detected problems with the price data it uses.
In annual terms, output prices rose 14.7% in December, its fifth straight slowdown, and input price growth was 16.5%, its sixth straight slowdown from a 24-year high. 6%.
In November, producer prices fell 0.1% m/m and rose 16.2% y/y, while input prices in November fell 0.2% and rose 18.0 respectively. %, the ONS said.
It said the impact of revisions relating to its data corrections – dating back to January 2021 – on major indexes was small.
Written by William Schomberg; edited by William James
Our standards: The Thomson Reuters Trust Principles.
. UK factories reduce their prices helping BoE fight against inflation