Statistical bulletin: Services Producer Price Index - Quarter 2 2011

Key Points

• Net sector aggregate of selected SPPI's 12 month inflation rose 2.4 per cent in the second quarter of 2011.
• Between the first and second quarter of 2011 net sector aggregate of selected SPPI's rose 0.9 per cent.
• Gross sector aggregate of selected SPPI's 12 month inflation rose 1.9 per cent in the second quarter of 2011.
• Between the first and second quarter of 2011 gross sector aggregate of selected SPPI's rose 0.6 per cent.

Summary of Services Producer Price Index

The Services Producer Price Index (SPPI), formerly the Corporate Services Price Index (CSPI), is constructed from a statutory quarterly survey. The SPPI's are primarily a suite of individual price indices that provide information on price change for a limited range of service industries. Each SPPI captures quarterly changes in the price received for services provided by UK businesses to other UK businesses and Government. These individual price indices are also aggregated together to create a 'service industry' SPPI with limited coverage (it does not provide full coverage of the 'service sector').

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

Services Producer Price Index - Net Sector

In the second quarter of 2011, movements in the net sector aggregate of selected services producer price index were as follows:

• 12 month inflation rose 2.4 per cent, compared with a rise of 2.7 per cent in both the first quarter of 2011 and the fourth quarter of 2010.

• Between the first and second quarter of 2011 the net sector aggregate services producer price index rose 0.9 per cent, mainly reflecting price increases in advertising placement, sewerage services and freight transport by road partially offset by a price fall in freight forwarding.

Aggregate SPPI (Net Sector)

United Kingdom

Source: Services Producer Price Index (SPPI) - Office for National Statistics

Notes:

1. The graph shows how the annual net sector aggregate SPPI inflation compares with the producer price index for all manufactured products.

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Notable industry movements and contributions to the net aggregate Services Producer Price Index - 3 month change to quarter 2 2011

Contributions to the net aggregate SPPI, latest quarter on previous quarter percentage change

United Kingdom

Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Notable industry movements and contributions to the net aggregate Services Producer Price Index - 12 month change to quarter 2 2011

Contribution to the net aggregate SPPI, latest quarter on same quarter of previous year percentage change

United Kingdom

Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Main contributions to the net aggregate Services Producer Price Index 12 month rate

The largest upward effects to the net aggregate services producer price index over the past 12 months came from:

• freight transport by road

• sorted recovered materials services 

• publishing services.

Other notable upward contributions to the 12 month change came from: sewerage services, advertising placement and maintenance of motor vehicles

These upward movements were partially offset by downward contributions from business telecoms and security services.

Freight Transport by Road

United Kingdom

Source: Services Producer Price Index (SPPI) - Office for National Statistics

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Sorted Recovered Materials Services

United Kingdom

Source: Services Producer Price Index (SPPI) - Office for National Statistics

Notes:

1. See background notes 3 and 4 of this Statistical Bulletin

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Publishing Services

United Kingdom

Source: Services Producer Price Index (SPPI) - Office for National Statistics

Notes:

1. See background note 3 of this Statistical Bulletin

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Services Producer Price Index - Gross Sector

In the second quarter of 2011, movements in the gross sector aggregate of selected services producer price index were as follows:

• 12 month inflation rose 1.9 per cent, compared with a rise of 2.4 per cent in the first quarter of 2011. This is the lowest annual rate since the first quarter of 2010, when the index also rose by 1.9 per cent. The last time the annual rate was lower was in quarter four 2009 (0.6 per cent).

• Between the first and second quarter of 2011 the gross sector aggregate services producer price index rose 0.6 per cent.

Aggregate SPPI (Net and Gross Sectors)

United Kingdom

Source: Services Producer Price Index (SPPI) - Office for National Statistics

Notes:

1. This graph depicts the aggregate SPPI annual percentage change for both the net and gross sector series.

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Background notes

1. SPPI Development

   1.  A development project to increase the industrial coverage of the SPPI has been in place since 2009. Recently the project has focussed on the following industries:

   • Legal Services

   • Architecture and Engineering

   • Accountancy

   • Cargo Handling

   An article summarising the findings from this recent stage of the project will be published on Friday 26th August 2011, including experimental new price indices for these industries.

    

   The article will be on the SPPI section of the ONS website at:
   http://www.ons.gov.uk/ons/taxonomy/index.html?nscl=Services+Producer+Price+Indices 

    

   Link to Summary Quality Report

   2.  A Summary Quality Report for the SPPI can be found at:

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

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

    

   Implementation of SIC 2007 in ONS: Update on SPPI

   3.  Services Producer Prices has implemented the change to the Standard Industrial Classification 2007 (SIC 2007). The most significant change to SPPI involves the reclassification of ‘recovered secondary raw materials’ and ‘publishing’. These are no longer classified in the manufacturing sector, but are now classified under services.

    

   Further information on the changes and impact of the SIC 2007 on SPPI can be found by following these links: 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 SPPI please contact:

   ppi@ons.gov.uk or sppi@ons.gov.uk

    

   4.  The SPPI index for sorted recovered materials services (38.32) uses the measurement of price change for recovered material ‘products’ as a proxy. Under the SIC2007 project these recovered material products, along with publishing services, were reclassified out of the manufacturing industry and into SPPI.

    

   Relevance to users

   5.  On 10 May 2010, the UK Statistics Authority Assessment team accredited the Services Producer Price Indices (SPPI) as a new National Statistic. 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;

   • are well explained and readily accessible;

   • are produced according to sound methods, and

   • are managed impartially and objectively in the public interest.

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

    

   Further information regarding the UK Statistics Authority assessment can be found via the following link (Assessment Report 25): http://www.statisticsauthority.gov.uk/assessment/assessment-reports/index.html

    

   Detailed information relating to the published SPPIs and the development of the price index can be accessed via the attached articles:

   http://www.ons.gov.uk/ons/taxonomy/index.html?nscl=Services+Producer+Price+Indices

    

   6.  Index numbers shown in this Statistical Bulletin are on a net sector basis. These relate only to transactions between the corporate services sector and other sectors. Detailed tables also contain gross sector indices which include transactions within the corporate services sector.

    

   7.  Indices relate to average prices per quarter. The full effect of a price change occurring within a quarter will only be reflected in the index for the following quarter. All index numbers exclude VAT and are not seasonally adjusted. Since SPPIs exclude VAT, they are not affected by the increase in the standard rate of VAT to 20 per cent from 4 January 2011.

    

   8.  SPPI inflation is the percentage change in the net sector index for the latest quarter compared with the corresponding quarter in the previous year.

    

   9.  A number of external data sources are currently used in the compilation of the SPPI. Details of these follow:

    

   • Property rental payments – Investment Property Databank (IPD)

   • Business telecommunications – Office of Communications (Ofcom)

   • Financial Intermediation (Banks) – Bank of England (BoE)

   • Sewerage services – Office of Water Services (Ofwat)

   • Business rail fares – Office of Rail Regulation (ORR)

   • National post parcels - Parcelforce 
     

   10.  Following a quality review by ONS in January 2007 a decision was made to withdraw the Banking SPPI from publication. As a result the index has been re-developed and was re-introduced in Q3 2008. Under the re-development, the quality of the data collection and processing has been improved and the number of products included in the index has increased. However, the new index is not regarded as proxy for all Financial Intermediation services within the Standard Industrial Classification (SIC) 64. It has not therefore been included in the aggregate SPPI. The services measured are classified to SIC 64.19/1 and are published as a separate index known as the “SPPI for Financial Intermediation (Banks)”.

    

   Accuracy

   11.  SPPI policy is to show significant revisions but to suppress minor changes to avoid unnecessary inconvenience to users. Indices for the most recent two quarters are regarded as provisional and can be changed as later data become available. The National Statistics website contains information on the SPPI revisions policy: http://www.ons.gov.uk/ons/guide-method/revisions/corporate-statistical-policy/index.html  

    

   Publication Policy

   12.  The complete run of data in the tables of this Statistical Bulletin is also available to view and download in other electronic formats free of charge using the National Statistics Datasets and Reference Tables website service. 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

    

   13.  Follow us on www.twitter.com/statisticsONS

    

   14.  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. © Crown copyright 2011.
   

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.