Data published by the Office for National Statistics (ONS) showed that in December the growth of producer input prices slowed to 16.5% per annum from 18% per annum in November. This indicator has now been positive for 25 consecutive months. However, it has slowed for the sixth consecutive month and is down 8.1% from the record high of 24.6% in June 2022.
Meanwhile, producer output prices rose by 14.7% per annum after rising by 16.2% per annum in November. The annual rate of output PPI has now been positive for 24 consecutive months, but has slowed for the fifth consecutive month.
The ONS said that inputs of other parts and equipment, and petroleum products provided the largest downward contributions to the change in the annual rates of input and output inflation, respectively.
The report also showed that producer input prices fell by 1.1% in December after a 0.2% decline in November. The monthly rate reached a record high of 5.1% in March 2022. Meanwhile, producer output prices dropped 0.8% after falling 0.1% in November. This is the lowest the monthly rate has been since April 2020.
The latest data is likely to please Bank of England policymakers, but will not change their plans. Market participants predict that at its February meeting, the Central Bank will raise interest rates again (for the 10th time in a row), with most pricing in another 0.5% increase, to 4%.