Statistical bulletin: Producer Price Index, September 2011

Key Points

• In the year to September 2011 the output price index for home sales of manufactured products rose 6.3 per cent.
• Between August and September the output index for home sales of manufactured products rose 0.3 per cent.
• In the year to September 2011 the output price index excluding food, beverages, tobacco & petroleum rose 3.8 per cent.
• In the year to September 2011 the total input price index rose by 17.5 per cent.
• Between August and September the total input price index rose 1.7 per cent.

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 September 2011, movements in output prices for UK manufactured products were as follows:

• The output price index for home sales of manufactured products rose 6.3 per cent, compared with a rise of 6.0 per cent last month. This is the highest annual rate since October 2008, when the index rose 6.6 per cent.

• The output price index excluding food, beverages, tobacco & petroleum rose 3.8 per cent, compared with a rise of 3.6 per cent last month.

• The output price index excluding excise duty rose 6.4 per cent, compared with a rise of 6.2 per cent last month. This is the highest annual rate since October 2008, when the index rose 6.9 per cent.

Between August and September:

• The output price index for home sales of manufactured products rose 0.3 per cent, mainly reflecting price rises in petroleum products, computer, electrical & optical products and clothing, textiles & leather product prices.

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 September 2011, movements in input prices^1,2 of materials and fuels purchased by the UK manufacturing industry were as follows:

• The total input price index rose by 17.5 per cent, compared with a rise of 16.2 per cent last month.

• The input price index for the manufacturing industry excluding the food, beverages tobacco & petroleum industries rose 13.3 per cent, compared with a rise of 13.0 per cent last month.

Between August and September:

• The total input price index rose 1.7 per cent, mainly reflecting price rises in crude oil and other imported parts and equipment, offset slightly by a fall in the price of home produced food.

• Seasonally adjusted³, the input price index for the manufacturing industry excluding the food, beverages tobacco & petroleum industries rose 0.8 per cent.

• The price of imported materials as a whole (including crude oil) rose 1.9 per cent between August and September.

Input prices

Table source: Office for National Statistics

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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Notes for Input Prices: Summary

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

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

3. NSA/SA: not/seasonally adjusted.

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 September 2011

Table source: Office for National Statistics

1 month change to September 2011

Table source: Office for National Statistics

Contribution to 12 months percentage change in total (6.3%)

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 (0.3%)

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

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  (21.5 Kb)

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 September 2011

Table source: Office for National Statistics

1 month change to September 2011

Table source: Office for National Statistics

Contribution to 12 months percentage change in total (17.5%)

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 (1.7%)

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

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• XLS format
  (21 Kb)

Output Prices: Summary Of Statistics

The overall output price index rose 6.3 per cent in the year to September, compared to a rise of 6.0 per cent in the year to August. This is the highest annual rate since October 2008 when the index rose 6.6 per cent. The index rose 0.3 per cent between August and September, mainly reflecting price rises in petroleum products, computer, electrical & optical products and clothing, textiles & leather products. Between August and September 2010 the index was unchanged.

Petroleum product prices rose 0.7 per cent between August and September and rose 18.1 per cent in the year to September. The monthly rise was mainly due to a 1.8 per cent increase in the price of diesel and gas oil, offset slightly by a decrease of 0.5 per cent in the price of unleaded petrol.

Computer, electrical & optical product prices rose 0.5 per cent between August and September and fell 0.5 per cent in the year to September. The monthly rise was mainly due to a 1.2 per cent increase in the price of measuring, testing & navigating equipment, a 1.2 per cent increase in the price of computers and peripheral equipment and a 4.2 per cent increase in the price of electronic components & boards. 

Clothing, textiles & leather product prices rose 0.4 per cent between August and September and rose 5.9 per cent in the year to September. This is the highest annual rate since records began (January 1997). The monthly rise was mainly due to a 0.9 per cent increase in textile prices, most notably made-up textile articles, except apparel, and a 0.6 per cent increase in leather and related product prices.

All other product groups recorded price rises in the month of September, except alcohol & tobacco, which showed no movement.

Output price index excluding food, beverages, tobacco & petroleum

The output price index for manufactured products excluding food, beverages, tobacco & petroleum rose 3.8 per cent in the year to September, compared with a rise of 3.6 per cent in the year to August. This is the highest annual rate since July 2010, when the index also rose 3.8 per cent. The last time the annual rate was higher was in February 2009, when the index rose 4.0 per cent. This index is not affected by changes in excise duty. The index rose 0.3 per cent between August and September compared with a rise of 0.1 per cent between August and September 2010.

Output price index excluding excise duty

This index rose 6.4 per cent in the year to September, compared with a rise of 6.2 per cent in the year to August. This is the hishest annual rate since October 2008 when the index rose 6.9 per cent. The index excluding excise duty rose 0.2 per cent between August and September, compared with no movement between August and September 2010.

Input Prices: Summary Of Statistics

The overall input index rose 17.5 per cent in the year to September, compared with a rise of 16.2 per cent in the year to August.

The input index for all manufacturing rose 1.7 per cent between August and September compared with a rise of 0.6 per cent between August and September 2010. The monthly rise in the input index between August and September mainly reflected price increases in crude oil and other imported parts & equipment; these were partially offset by a fall in home produced food prices.

Crude oil prices rose 5.1 per cent between August and September and rose 42.8 per cent in the year to September.

Other imported parts & equipment product prices rose 1.1 per cent between August and September and rose 8.2 per cent in the year to September. This is the highest annual rate since April 2009, when the index rose 8.5 per cent. The monthly rise was mainly due to widespread increases across a broad range of products, most notably a 1.1 per cent increase in the prices of imported electronic components & boards and a 1.7 per cent increase in the price of imported bodies (coachwork) for motor vehicles, trailers and semi-trailers.

Home produced food prices fell 0.9 per cent between August and September and rose 4.7 per cent in the year to September. The monthly fall was mainly due to widespread decreases across a range of products, including a 5.9 per cent fall in the price of home produced potatoes, a 1.6 per cent fall in home produced cereals, and a 6.4 per cent fall in home produced fruit. This is the 4th successive monthly fall in a row.

Apart from fuels (inc CCL) and other home produced materials all other product groups recorded price rises in September.

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 0.8 per cent in seasonally adjusted terms between August and September. The unadjusted index rose 13.3 per cent in the year to September, compared with a rise of 13.0 per cent in the year to August.

Output Prices: Records

All manufactured products

Annual rate 6.3%, up from 6.0% last month. Last higher in October 2008 (6.6%). Monthly rate 0.3% up from 0.0% last month. Also 0.3% in July 2011. Last higher in April 2011 (1.1%).

Excluding food, beverages, tobacco & petroleum

Annual rate 3.8%, up from 3.6% last month. Also 3.8% in both June and Jul 2010. Last higher in February 2009 (4.0%). Monthly rate 0.3% up from 0.2% last month.

All manufactured products excluding duty

Annual rate 6.4%, up from 6.2% last month. Last higher in October 2008 (6.9%). Monthly rate 0.2% up from 0.1% last month.

Food products

Annual rate 9.4%, up from 8.9% last month. Last higher in October 2008 (9.9%). Monthly rate 0.2% up from 0.1% last month. 

Tobacco & alcohol (inc duty)

Annual rate 5.9%, down from 6.0% last month. Also 5.9% in June 2011. Last lower May 2011 (5.1%). Monthly rate 0.0% up from -0.4% last month.

Clothing, textiles & leather

Annual rate 5.9%, up from 5.3% last month. This is the highest annual rate since records began (January 1997). Monthly rate 0.4% up from 0.0% last month.

Paper & printing

Annual rate 5.3%, down from 5.4% last month. Last lower in May 2011 (5.1%). Monthly rate 0.2% up from 0.1% last month.

Petroleum products

Annual rate 18.1%, up from 17.2% last month. Last higher in March 2011 (18.2%). Monthly rate 0.7% up from -0.8% last month. Last higher in April 2011 (1.6%).

Chemical & pharmaceutical products

Annual rate 6.9%, down from 7.2% last month. Monthly rate 0.1% up from 0.9% last month. Last lower in May 2011 (-0.4%).

Metal, machinery & equipment nec

Annual rate 3.5%, down from 3.6% last month. Last lower in May 2010 (3.3%). Monthly rate 0.2%, up from -0.1% last month.

Computer, electrical & optical equipment

Annual rate -0.5%, up from -0.9% last month. Last higher in April 2011 (0.4%). Monthly rate 0.5% up from 0.1% last month. Last higher in January 2011 (0.6%).

Transport equipment

Annual rate 1.7%, down from 1.8% last month. Last lower in June 2011 (1.4%). Monthly rate 0.2% up from -0.1% last month.

Other manufactured products

Annual rate 3.6%, unchanged from last month. Last higher in April 2009 (4.0%). Monthly rate 0.2% unchanged from last month. Also 0.2% in November and December 2010. Last lower in September 2010 (0.1%).

Input Prices: Records

Materials & fuels purchased

Annual rate 17.5%, up from 16.2% last month. Last higher in July 2011 (18.2%). Monthly rate 1.7% up from -1.8% last month. Last higher in April 2011 (2.8%).

Excluding food, beverages, tobacco & petroleum industries

Annual rate 13.3%, up from 13.0% last month. Also 13.3% in July 2011. Last higher in November 2008 (14.8%). Monthly rate (seasonally adjusted) 0.8% up from 0.4% last month.

Fuel including climate change levy

Annual rate 9.8%, up from 8.1% last month. Also 9.8% in June 2011. Last higher in May 2011 (10.3%). Monthly rate -0.2% down from -0.1% last month. Last lower in June 2011 (-0.6%).

Crude oil

Annual rate 42.8%, up from 36.1% last month. Monthly rate 5.1% up from -5.3% last month. Last higher in April 2011 (7.8%).

Home food materials

Annual rate 4.7%, down from 5.4% last month. Last lower in July 2010 (4.5%).  Monthly rate -0.9% up from -1.6% last month. Last higher in May 2011 (1.7%).

Imported food materials

Annual rate 13.8%, up from 13.7% last month. Last higher in March 2009 (14.4%). Monthly rate 1.3% up from -0.1% last month. Last higher in February 2011 (2.0%).

Other home-produced materials

Annual rate 4.8%, up from 3.9% last month. Last higher in June 2011 (7.1%). Monthly rate -0.1% down from 0.5% last month.

Imported metals

Annual rate 17.2%, down from 21.0% last month. Last lower in May 2011 (15.0%). Monthly rate 0.8% up from -0.9% last month.

Imported chemicals

Annual rate 10.0%, down from 10.7% last month. Last lower in March 2011 (9.7%). Monthly rate 0.1% down from 0.2% last month.

Imported parts & equipment

Annual rate 8.2%, up from 7.8% last month. Last higher in April 2009 (8.5%). Monthly rate 1.1% up from -0.6% last month. Last higher in March 2011 (2.1%).

Other imported materials

Annual rate 13.0%, down from 13.6% last month. Monthly rate 0.5% up from 0.3% last month. 

Revisions

For this bulletin Reference Tables  (207.5 Kb Excel sheet) 8R and 9R 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 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 September 2005 and August 2010 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 August 2011 and the calculations behind the averages in the table are available in the reference table area of this Statistical Bulletin, please see links below.

Revision triangle for total output (12 months) (1.49 Mb Excel sheet)

Revision triangle for total output (1 month) (1.49 Mb Excel sheet)

Revision triangle for total input (12 months) (1.5 Mb Excel sheet)

Revision triangle for total input (1 month) (1.5 Mb Excel sheet)

Background notes

1. Summary Quality Report

   A Summary Quality Report for the PPI can be found at:

   http://www.ons.gov.uk/ons/guide-method/method-quality/quality/quality-information/business-statistics/summary-quality-report-for-producer-price-indices.pdf

   This report describes in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.

   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.

   Further information on the changes and impact of the SIC 2007 on prices can be found by following this link:

   http://www.ons.gov.uk/ons/rel/elmr/economic-and-labour-market-review/no--12--december-2010/producer-prices-and-services-producer-prices--implementation-of-sic-2007.pdf

   Any comments about this work and its impact on PPI please contact ppi@ons.gov.uk

   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 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) 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.

   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.

   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.

   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"). Users can download the complete release in a choice of zipped formats or view and download their own selections of individual series. The Datasets and Reference Tables service can be accessed at: http://www.ons.gov.uk/ons/datasets-and-tables/index.html

   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 here (27.6 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 8.00am on Thursday in line with release protocols.

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   Next publication:

   11 November 2011

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2. 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

   These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

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