Industrial Input Prices Continue To Fall

The index for factory gate prices for goods purchased by UK manufacturers rose by 0.2% in the year to June compared with a 0.5% rise to May. Input prices continue to fall. The monthly comparison shows that factory gate prices fell between May and June by 0.2% compared with 0.1% between April and May. Materials and fuels prices fell by 4.4% over the year to June compared with a fall of 3.8% to May. Between May and June input prices fell by 0.8% compared with an increase of 0.3% between April and May.

Factory Gate Prices Up 0.1%

The output price for goods bought by UK manufacturers increased by 2%. Factory gate prices rose 0.1% between May and June 2013. Core factory gate prices increased by 0.1%. The overall price of materials bought by UK manufacturers rose 4.2%. Total input prices increased 0.2% between May and June 2013.

Factory Gate Prices At A Low

The producer price index, which measures the changes in input and output prices of goods bought and sold by manufacturers in the UK, reported an annual increase in December of 4.8%, the lowest annual rate for factory gate prices for home sales of manufactured products since December 2010. The monthly index fell by 0.2%, the first monthly fall since July 2010.

Over the year the biggest percentage increases were in petroleum products (10.5%), food products (7.1%) and tobacco and alcohol (6.6%).

The total input price index rose by 8.7% in the year to December, the lowest annual rate since October 2010. It was 13.6% the previous month. The monthly index fell by 0.6%.

The biggest percentage changes in the month to December were falls in the prices for petroleum products and chemicals and pharmaceuticals (both -0.9%) and increases in the prices of food, paper and printing and computer, electrical and optical (all 0.1%).

The producer price index provides a key measure of inflation along with other indicators like the CPI and the RPI.

Manufacturers Outlook Getting Brighter

The outlook for manufacturing is the least negative since June 2008 following months of destocking. Only a slight majority of UK manufacturers in the latest CBI Industrial Trends survey expect the volume of output to decrease in the next three months. However demand remains very weak with a majority of manufacturers reporting total order books still below normal for the seventh consecutive month. Export orders are also weak despite the weaker pound.