Statistical bulletin: Producer Price Index, April 2012

Key Points

• In the year to April 2012 the output price index for home sales of manufactured products rose 3.3 per cent, compared with a rise of 3.7 per cent last month. The last time the annual rate was lower was in December 2009, when the index rose 3.2 per cent.
• Between March and April the output index for home sales of manufactured products rose 0.7 per cent, compared with a rise of 0.6 per cent between February and March.
• In the year to April 2012 the output price index excluding food, beverages, tobacco & petroleum rose 2.3 per cent, compared with a rise of 2.5 per cent last month.
• Changes announced in last month's budget are estimated to have added 0.3 per cent to the overall index value in April.
• In the year to April 2012 the total input price index rose 1.2 per cent, compared with a rise of 5.6 per cent last month. The last time the annual rate was lower was in October 2009, when the index rose 0.8 per cent.
• This is the first time that the annual growth rate for input prices was lower than the annual growth rate in output prices since October 2009, when the input price index rose 0.8 per cent and the output price index rose 1.5 per cent.
• Between March and April the total input price index fell 1.5 per cent, compared with a rise of 1.7 per cent between February and March.

Producer Price Index

The Producer Price Index (PPI) is a monthly survey that measures the price changes of goods bought and sold by UK manufacturers and provides a key measure of inflation, alongside other indicators such as the Retail Prices Index (RPI), Consumer Prices Index (CPI) and Services Producer Prices Index (SPPI). This Statistical Bulletin contains a comprehensive selection of data on input and output index series. It contains producer price indices of materials and fuels purchased and output of manufacturing industry by broad sector.

The output price indices measure change in the prices of goods produced by UK manufacturers (these are often called 'factory gate prices').

The input price indices measure change in the prices of materials and fuels bought by UK manufacturers for processing. These are not limited to just those materials used in the final product, but also include what is required by the company in its normal day to day running.

Imported Price Indices (IPIs) are a series of economic indicators that measure change in the prices of goods and raw materials imported into the UK. IPIs are a key component of input price indices.

Exported Price Indices (EPIs) are a series of economic indicators that measure change in the prices of goods manufactured in the UK but destined for export markets.

Output Prices: Summary

In the year to April 2012, movements in output prices for UK manufactured products were as follows:

• The output price index for home sales of manufactured products rose 3.3 per cent, compared with a rise of 3.7 per cent last month. The last time the annual rate was lower was in December 2009, when the index rose 3.2 per cent.

• The output price index excluding food, beverages, tobacco & petroleum rose 2.3 per cent, compared with a rise of 2.5 per cent last month. The last time the annual rate was lower was in February 2010, when the index rose 2.2 per cent.

• The output price index excluding excise duty rose 3.2 per cent, compared with a rise of 3.5 per cent last month. The last time the annual rate was lower was in January 2010, when the index rose 3.1 per cent.

Between March and April:

• The output price index for home sales of manufactured products rose 0.7 per cent, compared with a rise of 0.6 per cent last month. The last time the monthly change was larger was in April 2011, when the index rose 1.1 per cent. The main contributions to the rise in the price index were tobacco & alcohol, computer, electrical & optical equipment, transport equipment and petroleum products.

• The output price index excluding food, beverages, tobacco & petroleum rose 0.6 per cent, compared with a rise of 0.1 per cent last month. The last time the monthly change was larger was in April 2011, when the index rose 0.8 per cent.

Output prices

Source: Index Numbers of Producer Prices (PPI): Provision of Price Information - Office for National Statistics

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Output prices (home sales)

Table source: Office for National Statistics

Input Prices: Summary

In the year to April 2012, movements in input prices of materials and fuels purchased by the UK manufacturing industry were as follows:

• The total input price index rose 1.2 per cent, compared with a rise of 5.6 per cent last month. The last time the annual rate was lower was in October 2009, when the index rose 0.8 per cent.

• The input price index for the manufacturing industry excluding the food, beverages tobacco & petroleum industries rose 2.5 per cent, compared with a rise of 4.2 per cent last month. This is the lowest annual rate since February 2010, when the index rose 2.2 per cent.

Between March and April:

• The total input price index fell 1.5 per cent, compared with a rise of 1.7 per cent between February and March. The 1.5 per cent fall was mainly driven by price falls in crude oil, imported metals and other imported parts & equipment. These falls were slightly offset by a rise in other imported materials.

• In seasonally adjusted terms, the input price index for the manufacturing industry excluding the food, beverages tobacco & petroleum industries rose 0.3 per cent.

• The price of imported materials as a whole (including crude oil) fell 1.7 per cent.

Input prices (materials & fuel) manufacturing industry

Source: Index Numbers of Producer Prices (PPI): Provision of Price Information - Office for National Statistics

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Input prices

Table source: Office for National Statistics

Table notes:

1. NSA: Not seasonally adjusted

2. SA: Seasonally adjusted

Notes for Input Prices: Summary

1. Input price indices include the Climate Change Levy which was introduced in June 2001.

2. Input price indices include the Aggregate Levy which was introduced in June 2002.

Output Prices: Detail

The contributions to movements in the total output index by the main product groups over the last year and month (not seasonally adjusted) are:

12 months change to April 2012

Table source: Office for National Statistics

1 month change to April 2012

Table source: Office for National Statistics

Contribution to 12 months percentage change in total (3.3%)

Source: Index Numbers of Producer Prices (PPI): Provision of Price Information - Office for National Statistics

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Contribution to 1 month percentage change in total (0.7%)

Source: Index Numbers of Producer Prices (PPI): Provision of Price Information - Office for National Statistics

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Input Prices: Detail

The contributions to movements in the total input index by the main commodities over the year and month (not seasonally adjusted) are:

12 months change to April 2012

Table source: Office for National Statistics

1 month change to April 2012

Table source: Office for National Statistics

Contribution to 12 months percentage change in total (1.2%)

Source: Index Numbers of Producer Prices (PPI): Provision of Price Information - Office for National Statistics

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Contribution to 1 month percentage change in total (-1.5%)

Source: Index Numbers of Producer Prices (PPI): Provision of Price Information - Office for National Statistics

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Output Prices: Summary Of Statistics

The overall output price index rose 3.3 per cent in the year to April 2012, compared with a rise of 3.7 per cent in the year to March 2012. The output price index rose 0.7 per cent between March and April, compared with a rise of 0.6 per cent between February and March. The monthly rise in the output index mainly reflected price increases in tobacco & alcohol products, computer, electrical & optical equipment, transport equipment and petroleum products.

Tobacco & alcohol (inc duty) product prices rose 2.2 per cent between March and April and rose 7.2 per cent in the year to April. The increase of 2.2 per cent on the month is the highest monthly rise since April 2011, when the index rose 2.9 per cent and was due to a 3.8 per cent increase in the price of tobacco and a 1.2 per cent increase in the price of alcohol, most notably beer, which rose by 1.4 per cent.

Computer, electrical & optical equipment prices rose 2.4 per cent between March and April and rose 3.0 per cent in the year to March. The increase of 2.4 per cent on the month is the highest monthly increase since records began (January 1996), and was mostly due to an increase of 12.5 per cent in the price of computer & peripheral equipment, most notably parts & accessories of computing machines, which rose 30.5 per cent.  

Transport equipment prices rose 1.2 per cent between March and April and rose 1.5 per cent in the year to April. This is the highest monthly increase since May 2008, when the index rose 1.4 per cent. The increase of 1.2 per cent between March and April was mainly due to a 2.8 per cent increase in the price of motor vehicles. 

Petroleum product prices rose 0.5 per cent between March and April and rose 3.7 per cent in the year to April. This is the lowest annual rate since October 2009, when the index fell 3.1 per cent. The monthly rise was mainly due to a 2.4 per cent increase in the price of unleaded petrol offset by a decrease of 0.9 per cent  in the price of diesel & gas oil.

Output price index excluding food, beverages, tobacco & petroleum

The output price index for manufactured products excluding food, beverages, tobacco & petroleum rose 2.3 per cent in the year to April, compared with a rise of 2.5 per cent in the year to March. The last time the annual rate was lower was in February 2010, when the index rose 2.2 per cent. This index is not affected by changes in excise duty. The index rose 0.6 per cent between March and April 2012 compared with a rise of 0.8 per cent between March and April 2011.

Output price index excluding excise duty

This index rose 3.2 per cent in the year to April, compared with a rise of 3.5 per cent in the year to March. The last time the annual rate was lower was in January 2010, when the index rose 3.1 per cent. Looking at the monthly index movements, the index rose 0.6 per cent between March and April 2012, compared with a rise of 0.9 per cent between March and April 2011.

Input Prices: Summary Of Statistics

The overall input index rose 1.2 per cent in the year to April 2012, compared with a rise of 5.6 per cent in the year to March 2012. This is the lowest annual rate since October 2009, when the index rose by 0.8 per cent.

The input index for all manufacturing fell 1.5 per cent between March and April 2012, compared with a rise of 2.8 per cent between March and April 2011. The monthly fall in the input index mainly reflected price decreases in crude oil, imported metals and other imported parts & equipment. These falls were offset slightly by a rise in the price of other imported materials.

Crude oil prices fell 4.8 per cent between March and April and fell 0.2 per cent in the year to April. This is the lowest annual rate since September 2009, when the index fell 24.3 per cent.

Imported metal prices fell 1.8 per cent between March and April and fell 6.8 per cent in the year to April. This is the lowest annual rate since July 2009, when the index fell 11.0 per cent. The monthly fall of 1.8 per cent was due to widespread decreases across a broad range of  products, most notably a 4.6 per cent fall in the price of non-EU imports of precious metals and a 5.9 per cent fall in the price of EU imports of other non-ferrous metals.

Other imported parts & equipment prices fell 0.9 per cent between March and April but rose 0.5 per cent in the year to April. This is the lowest annual rate since August 2007, when the index fell 1.2 per cent in the year. The decrease of 0.9 per cent between March and April is the lowest monthly rate since August 2010, when the index fell 1.6 per cent. The monthly fall was due to widespread decreases across a broad range of products, most notably a 1.4 per cent fall in the price of imported electronic components & boards and a 1.8 per cent fall in the price of imported other fabricated metal products.

Other imported material prices rose 1.3 per cent between March and April and rose by 7.8 per cent in the year to April. The monthly rise was mainly due to an 8.7 per cent increase in the price of imported metal ores & other mining & quarrying products. 

Input price index excluding the food, beverages, tobacco & petroleum industries

The index for materials and fuels purchased by manufacturing industry excluding the food, beverages, tobacco & petroleum industries rose 0.3 per cent in seasonally adjusted terms between March and April. The unadjusted index rose 2.5 per cent in the year to April, compared with a rise of 4.2 per cent in the year to March. This is the lowest annual rate since February 2010, when the index rose 2.2 per cent.

Output Prices: Records

All manufactured products

Annual rate 3.3%, down from 3.7% last month. Last lower in December 2009 (3.2%). Monthly rate 0.7% up from 0.6 per cent last month. Last higher in April 2011 (1.1%).

Excluding food, beverages, tobacco & petroleum

Annual rate 2.3%, down from 2.5% last month. Last lower in February 2010 (2.2%). Monthly rate 0.6% up from 0.1% last month. Last higher in April 2011 (0.8%).

All manufactured products excluding duty

Annual rate 3.2%, down from 3.5% last month. Last lower in January 2010 (3.1%). Monthly rate 0.6% up from 0.5% last month. Also 0.6% in February 2012. Last higher in April 2011 (0.9%).

Food products

Annual rate 3.6%, down from 4.1% last month. Also 3.6% in December 2010. Last lower in November 2010 (2.9%). Monthly rate 0.2%, up from 0.0% last month. Last higher in January 2012 (0.3%).

Tobacco & alcohol (inc duty)

Annual rate 7.2%, down from 7.9% last month. Last lower in December 2011 (6.8%). Monthly rate 2.2% up from 1.2% last month. Last higher in April 2011 (2.9%).

Clothing, textiles & leather

Annual rate 2.2%, down from 4.2% last month. Last lower in December 2010 (1.4%). Monthly rate -0.4%, down from 0.4% last month. Last lower in February 2009 (-0.5%).

Paper & printing

Annual rate 1.1%, down from 1.5% last month. Last lower in February 2010 (1.0%). Monthly rate 0.1%, up from -0.1% last month. Last higher in January 2012 (0.3%).

Petroleum products

Annual rate 3.7%, down from 4.7% last month. Last lower in October 2009 (-3.1%). Monthly rate 0.5% down from 2.7% last month. Last lower in December 2011 (-1.4%).

Chemical & pharmaceutical products

Annual rate 1.6%, down from 3.2% last month. Last lower in January 2012 (0.9%). Monthly rate 0.4%, down from 0.7% last month. Last lower in January 2012 (-0.2%).

Metal, machinery & equipment nec

Annual rate 1.8%, down from 2.3% last month. Last lower in March 2010 (1.1%). Monthly rate 0.1%, up from -0.3% last month. Last higher in February 2012 (0.5%).

Computer, electrical & optical equipment

Annual rate 3.0%, up from 0.4% last month. Last higher in November 2010 (5.1%). Monthly rate 2.4%, up from 0.1% last month. This is the highest monthly increase since records began (January 1996).

Transport equipment

Annual rate 1.5%, up from 0.7% last month. Last higher in September 2011 (1.8%). Monthly rate 1.2%, up from -0.3% last month. Last higher in May 2008 (1.4%).

Other manufactured products

Annual rate 4.0%, down from 4.1% last month. Last lower in February 2012 (3.8%). Monthly rate 0.2%, down from 0.7% last month. Also 0.2% in December 2011. Last lower in November 2011 (0.1%).

Input Prices: Records

Materials & fuels purchased

Annual rate 1.2%, down from 5.6% last month. Last lower in October 2009 (0.8%). Monthly rate -1.5% down from 1.7% last month. Last lower in August 2011 (-1.9%).

Excluding food, beverages, tobacco & petroleum industries

Annual rate 2.5%, down from 4.2% last month. Last lower in February 2010 (2.2%). Monthly rate (seasonally adjusted) 0.3%, up from -0.4% last month. Last higher in February 2012 (1.0%).

Imported materials as a whole (including crude oil)

Annual rate 0.6%, down from 5.5% last month. Last lower in September 2009 (-4.1%). Monthly rate -1.7%, down from 2.4% last month. Also -1.7% in May 2011. Last lower in December 2008 (-2.6%).

Fuel including climate change levy

Annual rate 8.7%, up from 7.9% last month. Last higher in February 2012 (13.3%). Monthly rate -0.1%, up from -2.8% last month. Last higher in February 2012 (2.9%).

Crude oil

Annual rate -0.2%, down from 13.1% last month. Last lower in September 2009 (-24.3%). Monthly rate -4.8%, down from 5.9% last month. Last lower in August 2011 (-5.7%).

Home food materials

Annual rate -1.9%, down from -0.2% last month. Last lower in April 2010 (-3.3%).  Monthly rate 0.4%, up from -0.9% last month. Last higher in February 2012 (2.3%).

Imported food materials

Annual rate 4.6%, unchanged from last month. Last higher in January 2012 (5.2%). Monthly rate 0.2%, down from 1.0% last month. Last lower in December 2011 (0.1%).

Other home-produced materials

Annual rate 3.0%, down from 4.1% last month. Last lower in March 2011 (2.9%). Monthly rate 0.9%, up from 0.8% last month. Last higher in January 2012 (1.0%).

Imported metals

Annual rate -6.8%, down from -4.2% last month. Last lower in July 2009 (-11.0%). Monthly rate -1.8%, down from 0.2% last month. Last lower in October 2011 (-5.6%).

Imported chemicals

Annual rate 0.7%, down from 2.1% last month. Last lower in January 2010 (-1.0%). Monthly rate 0.1%, down from 0.5% last month. Also 0.1% in both January and February 2012. Last lower in December 2011 (-1.2%).

Imported parts & equipment

Annual rate 0.5%, down from 2.3% last month. Last lower in August 2007 (-1.2%). Monthly rate -0.9%, down from 0.2% last month. Last lower in August 2010 (-1.6%).

Other imported materials

Annual rate 7.8%, up from 7.2% last month. Last higher in December 2011 (9.7%). Monthly rate 1.3%, down from 2.0% last month. Last lower in February 2012 (-0.8%).

Revisions

For this bulletin Reference Tables 8R and 9R (219 Kb Excel sheet) highlight revisions to movements in price indices previously published in last month’s Statistical Bulletin. These are mainly caused by changes to the most recent estimates, as more price quotes are received, and revisions to seasonal adjustment factors, which are re-estimated every month.

Revisions between first publication and estimates twelve months later

Table source: Office for National Statistics

Table notes:

1. * Statistically significant.

Revisions to data provide one indication of the reliability of key indicators. The above table shows summary information on the size and direction of the revisions which have been made to the data covering a five year period. A statistical test has been applied to the average revision to find out if it is statistically significantly different from zero. An asterisk (*) shows that the test is significant.

The table presents a summary of the differences between the first estimates published between April 2006 and March 2011 and the estimates published 12 months later. These numbers include the effect of the reclassification onto SIC 2007.

Spreadsheets giving revisions triangles of estimates for all months from January 1998 through to March 2012 and the calculations behind the averages in the table are available in the reference table area of the ONS website;

Revision triangle for total output (12 months) (1.65 Mb Excel sheet)

Revision triangle for total output (1 month) (1.63 Mb Excel sheet)

Revision triangle for total input (12 months) (1.66 Mb Excel sheet)

Revision triangle for total input (1 month) (1.65 Mb Excel sheet)

Background notes

1. Key issues to this specific release

   The output PPI for April 2012 was affected by Budget increase in taxation of tobacco (coming into effect from 21 March 2012) and alcoholic drinks (coming into effect from 26 March 2012). Changes announced in last month's budget are estimated to have added 0.3 per cent to the overall output index in April.

2. Response to MM17 User Consultation Document

   Following a change in requirements from key users, the Office for National Statistics conducted a user consultation regarding the continuation of the Price Index Numbers for Current Cost Accounting (MM17). A response to this consultation can be found on the About ONS area of the ONS website (28.8 Kb Pdf) .

3. Article about rebasing the PPI and SPPI onto 2010=100

   An article outlining plans to rebase the producer prices index and services producer price index, at the end of 2013, can be found on the ONS website.

4. Quality and Methodology Information

   A Quality and Methodology Information (QMI) paper for the PPI describes in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.

5. Producer Price Index And Services Producer Prices: Implementation Of SIC 2007

   Producer Prices has implemented the change to the Standard Industrial Classification 2007 (SIC 2007). The most significant change to PPI output prices involves the reclassification of ‘recovered secondary raw materials’ and ‘publishing’. These are no longer classified in the manufacturing sector, but are classified under services. In addition to this, a new SIC division, ‘repair, installation and maintenance of machinery and equipment’ has been created. Under SIC 2003 these activities were classified within the output of manufacturing, but as part of the specific industries where this activity took place.

   Fundamental changes have been made to the classification of the PPI Trade surveys, Import Price indices (IPI) and Export Price Indices (EPI). As part of the reclassification project the classification of these trade surveys have become compliant with Eurostat’s Short Term Statistics Regulation. The collection of IPI and EPI will now be on an SIC basis, a switch from the Standard International Trade Classification (SITC) and Combined Nomenclature (CN) previously used. PPI input prices are heavily dependant on IPI.

   For further information on the changes and impact of the SIC 2007 on prices please see the Economic and Labour Market Review for December 2010.

   Any comments about this work and its impact on PPI please contact Producer Price Index Operations on +44 (0) 1633 45 6628 or email ppi@ons.gsi.gov.uk 

6. Relevance To Users

   Index numbers shown in the main text of this bulletin are on a net sector basis. The index for any sector relates only to transactions between that sector and other sectors, sales and purchases within sectors are excluded. However, the more detailed figures shown in reference tables 4 and 6 (219 Kb Excel sheet) are on a gross basis; that is, intra industry sales and purchases are included in each of these indices.

   Indices relate to average prices for a month. The full effect of a price change occurring part way through any month will only be reflected in the following month’s index.

   All index numbers exclude VAT. Excise duty (on cigarettes, manufactured tobacco, alcoholic liquor and petroleum products) are included, except where labeled otherwise. Since PPIs exclude VAT, they are not affected by the increase in the standard rate of VAT to 20 per cent from 4 January 2011.

   The detailed input indices of prices of materials and fuels purchased by industry (Reference Table 6) (219 Kb Excel sheet) do not include the climate change levy (CCL). This is because each industry can, in practice, pay its own rate for the various forms of energy, depending on the various negotiated discounts and exemptions that apply.

7. Common Pitfalls In Interpreting Series

   Expectations of accuracy and reliability in sample surveys are often too high. Revisions and sampling variability are inevitable consequences of the trade off between timeliness, accuracy and the burden on respondents. Details of sampling variability are included elsewhere in this bulletin.

   Very few statistical revisions arise as a result of ‘errors’ in the popular sense of the word. All estimates, by definition, are subject to statistical ‘error’ but, in this context, the word refers to the uncertainty in any process or calculation that uses sampling, estimation or modeling. Most revisions reflect either the adoption of new statistical techniques or the incorporation of new information which allows the statistical error of previous estimates to be reduced. Only rarely are there avoidable ‘errors’ such as human or system failures, and such mistakes are made quite clear when they are discovered and corrected.

8. Accuracy

   Figures for the latest two months are provisional and the latest five months are subject to revisions in light of (a) late and revised respondent data and (b), for the seasonally adjusted series, revisions to seasonal adjustment factors which are re-estimated every month. A routine seasonal adjustment review is normally conducted in the autumn annually. There are no planned methodological changes in the next 12 months.

9. Publication Policy

   The complete run of data in the tables of this bulletin are also available to view and download in other electronic formats free of charge using the Office for National Statistics Datasets and Reference Table service (if you want the data associated with this bulletin click into Download data in this release option). Users can download the complete release in a choice of zipped formats or view and download their own selections of individual series.

   Details of the policy governing the release of new data are available from the Media Relations Office. A list of the names of those given pre-publication access to the contents of this bulletin is available on the Producer Price Index: Pre-Release Access List (51.6 Kb Pdf) . In the light of the timing of the Monetary Policy Committee (MPC) meeting, the PPI is provided to the Bank of England at 8.00 am on Thursday in line with release protocols.

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    Next publication:

    8 June 2012

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12. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

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    Designation can be broadly interpreted to mean that the statistics:

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