Factory gate inflation eases unexpectedly in November
British factory gate inflation slowed unexpectedly in November after petroleum prices rose less quickly than the same time a year ago, official data showed on Friday. Skip related content
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The Office for National Statistics said annual producer output price inflation slowed to 3.9 percent in November from 4.0 percent in October, confounding forecasts for a pick-up to 4.1 percent.
No input price data was available, however. The ONS said it was delaying the publication of these figures until Monday, December 13 due to "potential errors".Nonetheless, Friday's data should provide some reassurance to the Bank of England that pipeline inflationary pressures are easing even though a rise in VAT next year is likely to keep consumer price inflation well above the Bank's 2 percent target.
"It could be a sign that factory gate inflation is past its peak, which would at least be helpful for goods price inflation at the CPI level if that trend were to be maintained," said Philip Shaw, economist at Investec.
There was no market reaction to the figures.
Before the data, economists had broadly expected that a rise in oil and other commodity prices would push up PPI over the past month.
The ONS said the slowdown in the headline PPI inflation was due to a slower rate of increase in petroleum prices than last year. Nonetheless, petroleum products were the biggest single contributor to output price inflation, up 9.8 percent on the year.
However, core producer price inflation -- excluding oil, food and tobacco -- picked up to 3.3 percent last month from a downwardly revised 3.2 percent in October, but was also below forecasts for a rise to 3.5 percent.
"What surprises me is the muted state of output price inflation given the clear improvement in manufacturing demand. I don't think there are any adverse implications for CPI inflation -- quite the reverse," said Brian Hilliard, economist at Societe Generale. (Reporting by Fiona Shaikh and David Milliken; Editing by Hugh Lawson)
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