Fresh hope worst of inflation pain might be over as producer prices continue to fall

Fresh hope worst of inflation pain might be over as producer prices continue to fall from last summer’s eye-watering high – but are still running at 16.5%

  • Producer input prices rose by 16.5% in year to December – down from June peak
  • Producer output prices – known as factory gate prices – also continue to fall
  • ONS says the prices of equipment and petrol has driven decline since summer

There was fresh hope Britain might be over the worst of the cost of living pain as producer price inflation continued to slow in December.

According to data from the Office for National Statistics, producer input prices – the price of materials and fuels bought by UK manufacturers – rose by 16.5 per cent in the year to December.

This was a fall from 18 per cent in the year to November 2022 and down from the eye-watering record high of 24.6 per cent in the year to June 2022.

It is the sixth consecutive month that the annual rate of input producer price inflation has slowed.

The ONS figures also showed that producer output prices – known as factory gate prices as it is the amount UK producers receive for goods they sell to the domestic market – rose by 14.7 per cent in the year to December.

This was down from 16.2 per cent in the year to November and down from 17.5 per cent in the year to October.

The annual rate of output producer price inflation recently peaked at 19.9 per cent in the year to July 2022 and has now slowed for a fifth consecutive month.

The ONS said the prices of equipment and petrol had driven the decline in both input and output producer price inflation.

There was fresh hope Britain might be over the worst of the cost of living pain as producer price inflation continued to slow in December

There was fresh hope Britain might be over the worst of the cost of living pain as producer price inflation continued to slow in December 

The ONS said the prices of equipment and petrol had driven the decline in both input and output producer price inflation

The ONS said the prices of equipment and petrol had driven the decline in both input and output producer price inflation

The annual rate of inflation for services sold by UK companies, known as the Services Producer Price Index, was 5.2 per cent in October to December last year

The annual rate of inflation for services sold by UK companies, known as the Services Producer Price Index, was 5.2 per cent in October to December last year

Jeremy Hunt is under increasing pressure from Tory MPs to cut taxes at his budget in March - but the Chancellor could have to deal with gloomier growth forecasts

Jeremy Hunt is under increasing pressure from Tory MPs to cut taxes at his budget in March – but the Chancellor could have to deal with gloomier growth forecasts

The annual rate of inflation for services sold by UK companies, known as the Services Producer Price Index, was 5.2 per cent in October to December last year, according to the ONS data.

This was down from a record high of 6.2 per cent in July to September 2022.

The ONS figures will further fuel hopes that inflation is finally on the way down to ease the cost of living crisis for households.

The annual CPI rate of inflation, the headline figure, was 10.5 per cent in December, which was down from 10.7 per cent the previous month.

Andrew Bailey, the Bank of England Governor, last week said Threadneedle Street thought inflation would ‘fall quite rapidly’ during 2023 as energy prices decrease.

But he also stuck to the Bank’s expectation that Britain would soon fall into recession, which Mr Bailey said could be ‘long, but shallow’.

The Times reported today that the Office for Budget Responsibility has warned Chancellor Jeremy Hunt that it intends to revise its growth forecasts down ahead of his March budget.

This could limit Mr Hunt’s room for manoeuvre at a time when he is facing growing calls among Tory MPs to cut taxes.

Source

Related posts