UK producer price inflation slowed to the lowest rate in almost a year in December as cost pressures ease.
Producer input prices – the prices businesses pay for materials and other goods – rose at an annual rate of 16.5 percent in December, down from 18.0 percent in the previous month, and well below the peak of 25 percent in June 2022, according to data published by the Office for National Statistics on Wednesday.
Factory gate prices rose at an annual rate of 14.7 percent in December, down from 16.2 percent in the previous month and a recent peak of 20 percent in July.
The ONS said the drop was driven by the prices of equipment and petrol.
Despite the decline, producer price inflation remained high both by historical standards and in comparison to other countries. It averaged 2.4 percent between 1985 and 2020, before Russia’s invasion of Ukraine sent gas and food prices soaring.
PPI fell less sharply in the UK than in Germany, where it halved between August and December, according to separate official data.
High price pressures, and their impact on spending and activity, are expected to push the UK economy into recession this year.
“A combination of high inflation, falling real incomes, rising interest rates and tighter fiscal policy are the primary obstacles to growth,” Hywel Ball, EY’s UK chairman said in his winter UK economic forecast.