Statistical bulletin: Producer Price Index, October 2012

Key points

• In the year to October 2012 the output price index for home sales of manufactured products rose 2.5 per cent, compared with a similar rise of 2.5 per cent last month.
• Between September and October the output index for home sales of manufactured products rose 0.1 per cent, compared with a rise of 0.5 per cent between August and September.
• In the year to October 2012 the output price index excluding food, beverages, tobacco & petroleum rose 1.4 per cent, compared with a rise of 1.2 per cent in the previous three months.
• In the year to October 2012 the total input price index rose 0.1 per cent, compared with a fall of 1.0 per cent last month.
• Between September and October the total input price index rose 0.4 per cent, compared with a fall of 0.1 per cent between August and September.

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 October 2012, movements in output prices for UK manufactured products were as follows:

• The output price index for home sales of manufactured products rose 2.5 per cent, compared with a similar rise of 2.5 per cent last month.

• The output price index excluding food, beverages, tobacco & petroleum rose 1.4 per cent, compared with a rise of 1.2 per cent in the previous three months.

• The output price index excluding excise duty rose 2.3 per cent, compared with a rise of 2.2 per cent last month.

Between September and October:

• The output price index for home sales of manufactured products rose 0.1 per cent, compared with a rise of 0.5 per cent last month. The main upward contributions to the monthly price rise were from a 0.5 per cent rise in tobacco & alcohol product prices and a 0.1 per cent rise in other manufactured products prices. These rises were partially offset by a 0.4 per cent fall in the price of petroleum products.

• The output price index excluding food, beverages, tobacco & petroleum rose 0.1 per cent, compared with a rise of 0.3 per cent last month.

Output prices (home sales)

Table source: Office for National Statistics

Output prices

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

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Input prices: summary

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

• The total input price index rose 0.1 per cent, compared with a fall of 1.0 per cent last month.

• The input price index for the manufacturing industry excluding the food, beverages, tobacco & petroleum industries fell 0.3 per cent, compared with a fall of 0.9 per cent last month.

• The price of imported materials as a whole (including crude oil) fell 2.0 per cent, compared with a fall of 3.5 per cent last month.

Between September and October:

• The total input price index rose 0.4 per cent, compared with a fall of 0.1 per cent between August and September. The main upward contributions to the monthly price rise were from a 3.1 per cent rise in fuels prices and a 0.5 per cent rise in other imported parts & equipment product prices.

• In seasonally adjusted terms, the input price index for the manufacturing industry excluding the food, beverages, tobacco & petroleum industries rose 0.1 per cent between September and October compared with a rise of 0.2 per cent between August and September.

• The price of imported materials as a whole (including crude oil) rose 0.1 per cent between September and October, compared with a fall of 0.1 per cent between August and September.

Input prices

Table source: Office for National Statistics

Table notes:

1. NSA: Not seasonally adjusted

2. SA: Seasonally adjusted

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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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 October 2012

Table source: Office for National Statistics

1 month change to October 2012

Table source: Office for National Statistics

Contribution to 12 months percentage change in total (2.5%)

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 (0.1%)

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 October 2012

Table source: Office for National Statistics

1 month change to October 2012

Table source: Office for National Statistics

Contribution to 12 months percentage change in total (0.1%)

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 (0.4%)

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

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• XLS format
  (24.5 Kb)

Notes for Input prices: detail

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

2. Input price indices include the Aggregate Levy (13.9 Kb Pdf) which was introduced in June 2002.

Output prices: summary of statistics

The overall output price index rose 2.5 per cent in the year to October 2012, compared with a similar rise of 2.5 per cent in the year to September 2012. The output price index rose 0.1 per cent between September and October, compared with a rise of 0.5 per cent between August and September. The main contributions to the monthly rise in the price index were from tobacco & alcohol and other manufactured products. These rises were offset by a fall in petroleum products.

Tobacco and alcohol prices rose 0.5 per cent between September and October and rose 8.8 per cent in the year to October. This is the highest annual rate since December 2008 when the index rose 8.9 per cent. The monthly rise was due to a 1.7 per cent increase in the price of tobacco products.

Other manufactured products prices rose 0.1 per cent between September and October and rose 2.8 per cent in the year to October. The annual rate has been 2.8 percent for the last three months. The monthly rise was mainly due to a 1.1 per cent increase in the price of articles of concrete, cement and plaster and a 0.3 percent increase in the price of cement, lime and plaster.

Petroleum product prices fell 0.4 per cent between September and October and rose 2.9 per cent in the year to October. The monthly fall was mainly due to a 0.7 per cent decrease in the price of unleaded petrol but this was offset slightly by a 0.4 per cent increase in the price of diesel and gas oil.

Output price index excluding food, beverages, tobacco & petroleum

The output price index for manufactured products excluding food, beverages, tobacco & petroleum rose 1.4 per cent in the year to October, compared with a rise of 1.2 per cent in the previous three months. This is the first rise in the annual rate since February 2012, when the index stood at 3 per cent. This index is not affected by changes in excise duty.

Input prices: summary of statistics

The overall input index rose 0.1 per cent in the year to October 2012, compared with a fall of 1.0 per cent in the year to September 2012. The input index for all manufacturing rose 0.4 per cent between September and October, compared with a fall of 0.1 per cent between August and September. The main upward contributions to the monthly rise in the price index were fuels (inc CCL) and other imported parts and equipment. These rises were partially offset by a fall in the price index for crude oil.

The index for fuel (incl CCL) rose 3.1 per cent between September and October and rose 5.5 per cent in the year to October. This is the highest monthly rate since November 2011 when the index rose 3.3 per cent. The monthly increase is due to a 2.5 per cent increase in the price of electricity and a 4.4 per cent increase in the price of gas.

The index for other imported parts & equipment rose 0.5 per cent between September and October and fell 1.9 per cent in the year to October. This is the highest monthly rate since September 2011 when the index rose 1.1 per cent. The monthly rise was due to widespread increases across a broad range of products, most notably a 2.3 per cent increase in the price of imported computers and peripheral equipment and 0.4 per cent increase in the price of imported electronic components & boards.

Crude oil prices fell 0.3 per cent between September and October and fell 1.3 per cent in the year to October.

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

The index for materials and fuels purchased by manufacturing industries other than food, beverages, tobacco & petroleum industries in seasonally adjusted terms rose 0.1 per cent between September and October. The unadjusted index rose 0.5 per cent between September and October, but fell 0.3 per cent in the year to October.

Output prices: records for October 2012

All manufactured products

Annual rate 2.5 per cent, unchanged from last month. Last higher in May 2012 (2.8 per cent). Monthly rate 0.1 per cent, down from 0.5 per cent last month. Last equal in July 2012 and last lower in June 2012 (-0.6 per cent).

Excluding food, beverages, tobacco & petroleum

Annual rate 1.4 per cent, up from 1.2 in the previous two months. Last higher in June 2012 (1.7 per cent). Monthly rate 0.1 per cent, down from 0.3 per cent last month. Also 0.1 per cent in August 2012. Last lower in July 2012 (-0.1 per cent).

All manufactured products excluding duty

Annual rate 2.3 per cent, up from 2.2 per cent last month. Last higher in May 2012 (2.5 per cent). Monthly rate 0.2 per cent, down from 0.5 per cent last month. Last lower in July 2012 (0.1 per cent).

Food products

Annual rate 2.2 per cent, down from 2.3 per cent last month. Also 2.2 per cent in July 2012. Last lower in September 2010 (1.0 per cent). Monthly rate 0.1 per cent, down from 0.5 per cent last month. Last lower in July 2012 (0.0 per cent).

Tobacco & alcohol (inc duty)

Annual rate 8.8 per cent, up from 8.7 per cent last month. Last higher in December 2008 (8.9 per cent). Monthly rate 0.5 per cent, up from 0.1 per cent last month. Also 0.5 per cent in July 2012. Last higher in April 2012 (2.8 per cent).

Clothing, textiles & leather

Annual rate 2.0 per cent, down from 2.2 per cent last month. Also 2.0 per cent in July 2012. Last lower in June 2012 (1.8 per cent). Monthly rate 0.1 per cent, down from 0.2 per cent last month. Also 0.1 per cent in August. Last lower in June 2012 (-0.2 per cent).

Paper & printing

Annual rate -1.0 per cent, up from -1.4 last month. Last higher in July 2012 (-0.5 per cent). Monthly rate 0.2 per cent, up from -0.1 per cent last month. Also 0.2 per cent in April 2012. Last higher in January 2012 (0.3 per cent).

Petroleum products

Annual rate 2.9 per cent, down from 3.4 per cent last month. Last lower in August 2012 (2.1 per cent). Monthly rate 2.0 per cent, down from 3.8 per cent last month. Last lower in July 2012 (0.5 per cent).

Chemical & pharmaceutical products

Annual rate -0.7 per cent, up from -1.3 per cent last month. Last higher in June 2012 (0.0 per cent). Monthly rate -0.2 per cent, down from 0.8 per cent last month. Last lower in July 2012 (-1.8 per cent).  

Metal, machinery & equipment nec

Annual rate 0.1 per cent, down from 0.4 per cent last month. Last lower in January 2010 (-0.2 per cent). Monthly rate 0.0 per cent, unchanged from last month. Last higher in May 2012 (0.1 per cent).

Computer, electrical & optical equipment

Annual rate 3.4 per cent, up from 2.9 per cent last month. Also 3.4 per cent in July. Last higher November 2010 (5.1 per cent). Monthly rate 0.3 per cent, up from  -0.1 per cent last month. Last higher in April 2012 (2.4 per cent).

Transport equipment

Annual rate 0.7 per cent, up from 0.4 per cent last month. Last higher in May 2012 (0.9 per cent). Monthly rate 0.2 per cent, up from 0.1 per cent last month. Last higher in April 2012 (0.8 per cent).

Other manufactured products

Annual rate 2.8 per cent, unchanged for the last three months. Also 2.8 per cent in December 2010. Last lower in June 2010 (2.5 per cent). Monthly rate 0.1 per cent, unchanged for the last three months. Last higher in June 2012 (0.2 per cent).

Input prices: records for October 2012

Materials & fuels purchased

Annual rate 0.1 per cent, up from -1.0 per cent last month. Last higher in August 2012 (1.2 per cent). Monthly rate 0.4 per cent, up from -0.1 per cent last month. Last higher in August 2012 (2.0 per cent).

Excluding food, beverages, tobacco & petroleum industries

Annual rate -0.3 per cent, up from -0.9 per cent. Also -0.3 in June 2012. Last higher in May 2012 (1.1 per cent). Monthly rate (seasonally adjusted) 0.1 per cent, down from 0.2 per cent last month. Last lower in July 2012 (-0.3 per cent).

Imported materials as a whole (including crude oil)

Annual rate -2.0 per cent, up from -3.5 per cent last month. Last higher in August 2012 (-1.4 per cent). Monthly rate 0.1 per cent, up from -0.1 last month. Last higher in August 2012 (2.0 per cent).

Fuel including climate change levy

Annual rate 5.5 per cent, down from 8.7 last month. Last lower in August 2012 (4.6 per cent). Monthly rate 3.1 per cent, up from 2.6 per cent last month. Last higher in November 2011 (3.3 per cent).

Crude oil

Annual rate -1.3 per cent, up from -3.0 per cent last month. Last higher in August 2012 (4.2 per cent). Monthly rate -0.3 per cent, up from -1.0 per cent last month. Last higher in August 2012 (9.5 per cent).

Home food materials

Annual rate 11.7 per cent, up from 10.4 per cent last month. Last higher in August 2012 (12.7 per cent). Monthly rate 0.4 per cent, up from -0.8 per cent last month. Last higher in June 2012 (11.8 per cent).

Imported food materials

Annual rate 4.0 per cent, up from 3.4 per cent for the last month. Last higher in May 2012 (4.7 per cent). Monthly rate -0.5 per cent, down from 0.6 per cent last month. Also -0.5 in November 2011. Last lower in October 2011 (-1.0 per cent).

Other home-produced materials

Annual rate -1.2 per cent, down from -0.6 per cent last month. Last lower in August 2012 (-2.6 per cent). Monthly rate -0.3 per cent, down from 1.7 per cent last month. Last lower in August 2012 (-1.7 per cent).

Imported metals

Annual rate -7.3 per cent, up from -12.1 per cent last month. Last higher in April 2012 (-6.9 per cent). Monthly rate -0.4 per cent, down from 1.5 per cent last month. Last lower in  August 2012 (-1.8 per cent).

Imported chemicals

Annual rate -2.4 per cent, up from -3.3 per cent last month. Last higher in July 2012 (-2.1 per cent). Monthly rate 0.4 per cent, up from 0.1 per cent last month. Last higher in March 2012 (5.0 per cent).

Imported parts & equipment

Annual rate -1.9 per cent, up from -3.0 per cent last month. Last higher in August 2012 (-1.2  per cent). Monthly rate 0.5 per cent, up from -0.7 per cent last month. Last higher in September 2011 (1.1 per cent).

Other imported materials

Annual rate -2.2 per cent, up from -2.3 per cent last month. Last higher in August 2012 (-0.9 per cent). Monthly rate 0.3 per cent, up from -0.8 per cent last month. Last higher in June 2012 (7.0 per cent).

Revisions

Revisions (Tables 8R and 9R)

For this bulletin reference tables 8R and 9R (229 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. The headline figures for input prices for August and September have upwards revisions and there are no revisions for headline output prices. These revisions were mainly caused by quality adjustments due to late data.

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 October 2006 and September 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 September 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) (1.74 Mb Excel sheet)

Revision triangle for total output (1 month) (1.72 Mb Excel sheet)

Revision triangle for total input (12 months) (1.76 Mb Excel sheet)

Revision triangle for total input (1 month) (1.75 Mb Excel sheet)

Background notes

1. 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.

2. Quality and Methodology Information

   A Quality and Methodology Information (QMI) (109.5 Kb Pdf) 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.

3. 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 dependent 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 (84.1 Kb Pdf) .

   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 Operations. 

4. 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 (229 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 labelled 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) (229 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.

5. 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 modelling. 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.

6. 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 are re-estimated every month. A routine seasonal adjustment review is normally conducted in the autumn each year.

   Every 5 years, producer price indices are rebased, and their weights updated to reflect changes in the industry. The article referred to in background note 1, informs users about work underway to rebase PPIs from a 2005=100 basis to a 2010=100 basis, and update the weights. PPIs will move to a 2010=100 basis from Autumn 2013. More information about the impact of rebasing will be published as the project progresses and will be drawn to users attention in the regular statistical bulletin.

7. 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. (21.8 Kb Pdf)

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9. National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

   Next publication:

   18 December 2012

   Media contact:

   Tel:  Luke Croydon or David Bradbury on 0845 6041858
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   E-mail:  media.relations@ons.gsi.gov.uk

   Statistical contact:

   Tel:  Liam Murray on +44 (0)1633 455811
   E-mail: ppi@ons.gsi.gov.uk

   PPI/SPPI Enquiries:

   Tel +44 (0)1633 455901 or +44 (0)1633 455941

10. 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

    The United Kingdom Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.

    Designation can be broadly interpreted to mean that the statistics:

    • meet identified user needs;
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    Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

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