Statistical bulletin: Services Producer Price Index, Quarter 2 2012

Key Points

• The net sector aggregate of selected SPPIs rose 1.0 per cent in the 12 months to the second quarter of 2012, compared with a rise of 1.6 per cent in the first quarter of 2012. This is the lowest annual rate since the fourth quarter of 2009, when the index rose 0.2 per cent.
• Between the first and second quarter of 2012 the net sector aggregate of selected SPPIs rose 0.4 per cent.
• The gross sector aggregate of selected SPPIs rose 0.7 per cent in the 12 months to the second quarter of 2012, compared with a rise of 1.1 per cent in the first quarter of 2012. This is the lowest annual rate since the fourth quarter of 2009, when the index rose 0.6 per cent.
• Between the first and second quarter of 2012 the gross sector aggregate of selected SPPIs rose 0.4 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 SPPIs 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').

At the aggregate level, there are two types of SPPI series produced, which are:

• Net Sector Output (NSO) series:

  The net sector series measures transactions between business services and other sectors excluding business services.

• Gross Sector Output (GSO) series:

  The gross sector series measures transactions between business services and other sectors including business services.

The aggregate level SPPI is published on a NSO basis (unless otherwise stated).

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 2012, movements in the net sector aggregate of selected services producer price index were as follows:

• 12 month inflation rose 1.0 per cent compared with a rise of 1.6 per cent in the first quarter of 2012. This is the lowest annual rate since the fourth quarter of 2009, when the index rose 0.2 per cent.

• Between the first and the second quarter of 2012 the net sector aggregate services producer price index rose 0.4 per cent, mainly reflecting price increases in sewerage services, hotels, freight forwarding and property rentals. These increases were partially offset by price decreases in sorted recovered materials services and sea & coastal water freight.

Output Prices (Net Sector) - Aggregate SPPI

United Kingdom

Table source: Office for National Statistics

Table notes:

1. The aggregate SPPI is an aggregate of the individual industry level SPPIs published in this Statistical Bulletin. It does not provide full coverage of the service sector.

2. Aggregate indices exclude Financial Intermediation (Banks)

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 2012

3 month change to quarter 2 2012: Industry specific percentage change, latest quarter on previous quarter

United Kingdom

Table source: Office for National Statistics

Notable 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 2012

12 month change to quarter 2 2012: Industry specific percentage change, latest quarter on corresponding quarter of previous year

United Kingdom

Table source: Office for National Statistics

Notable contributions 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 contributions to the net aggregate services producer price index over the past 12 months came from:

• Publishing Services,

• Advertising Placement,

• Sewerage Services,

• Freight Transport by Road.

Other notable upward contributions to the 12 month change came from maintenance & repair of motor vehicles and waste disposal.

These upward movements were partially offset by a downward contribution from property rentals, business telecommunications and sorted recovered materials services.

Publishing Services

United Kingdom

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

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Advertising Placement

United Kingdom

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

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Sewerage Services

United Kingdom

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

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Services Producer Price Index - Gross Sector

In the second quarter of 2012, movements in the gross sector aggregate of selected services producer price index were as follows:

• 12 month inflation rose 0.7 per cent, compared with a rise of 1.1 per cent in the first quarter of 2012. This is the lowest annual rate since the fourth quarter of 2009, when the index rose 0.6 per cent. 

• Between the first and second quarter of 2012 the gross sector aggregate services producer price index rose 0.4 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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Service Producer Price Index - Records

Gross sector

Annual rate 0.7 per cent, down from 1.1 per cent in the previous quarter. Last lower in quarter 4 2009 (0.6 per cent). Quarterly rate 0.4 per cent, up from 0.3 per cent last quarter. Last higher in quarter 2 2011 (0.9 per cent).

Net sector

Annual rate 1.0 per cent, down from 1.6 per cent last quarter. Last lower in quarter 4 2009 (0.2 per cent). Quarterly rate 0.4 per cent, up from 0.3 per cent last quarter. Last higher in quarter 2 2011 (1.0 per cent).

Hotels

Annual rate -1.0 per cent, up from -3.2 per cent last quarter. Last higher in quarter 3 2011 (0.4 per cent). Quarterly rate 7.1 per cent, up from -3.4 per cent last quarter. This is the highest quarterly increase since records began (Quarter 1 1996).

Canteens & catering

Annual rate 1.9 per cent, up from 1.7 per cent last quarter. Last higher in quarter 1 2011 (2.4 per cent). Quarterly rate 0.2 per cent, down from 1.3 per cent last quarter. Last lower in quarter 3 2011 (0.0 per cent).

National post parcels

Annual rate 2.1 per cent, up from -3.4 per cent last quarter. Last higher in quarter 1 2010 (7.5 per cent). Quarterly rate 2.1 per cent, up from 0.0 per cent last quarter. Last higher in quarter 2 2009 (7.5 per cent).

Courier services

Annual rate -1.2 per cent, up from -1.6 per cent last quarter. Last higher in quarter 4 2011 (4.3 per cent). Quarterly rate 0.6 per cent, up from -2.2 per cent last quarter. Last higher in quarter 1 2011 (3.6 per cent).

Property rentals

Annual rate -0.3 per cent, up from -0.5 per cent last quarter. Last higher in quarter 4 2011 (-0.2 per cent). Quarterly rate 0.2 per cent, up from -0.2 per cent last quarter. Also 0.2 per cent in quarter 1 2011. Last higher in quarter 4 2010 (0.4 per cent).

Real estate agencies

Annual rate -1.1 per cent, up from -1.6 per cent last quarter. Last higher in quarter 3 2011 (1.0 per cent). Quarterly rate -0.5 per cent, down from -0.2 per cent last quarter. Last lower in quarter 4 2011 (-1.0 per cent).

Sewerage services

Annual rate 7.1 per cent, down from 11.6 per cent last quarter. Last lower in quarter 1 2011 (-2.8 per cent). Monthly rate 7.1 per cent, up from 0.0 per cent last month. Last higher in quarter 2 2011 (11.6 per cent).

Waste disposal

Annual rate 2.2 per cent, up from 0.5 per cent last quarter. Also 2.2 per cent in quarter 3 2011. Last higher in quarter 2 2011 (2.4 per cent). Quarterly rate 1.5 per cent, up from 0.4 per cent last quarter. Last higher in quarter 2 2010 (1.7 per cent).

Sorted recovered materials services

Annual rate -7.0 per cent, down from -0.1 per cent last quarter. Last lower in quarter 3 2009 (-14.0 per cent). Quarterly rate -3.1 per cent, down from 0.9 per cent last quarter. Last lower in quarter 4 2011 (-4.9 per cent).

Freight transport by road

Annual rate 1.2 per cent, down from 2.3 per cent last quarter. Last lower in quarter 1 2010 (0.4 per cent). Quarterly rate 0.0 per cent, down from 0.6 per cent last quarter. Last lower in quarter 1 2010 (-0.3 per cent).

Commercial vehicle ferries

Annual rate -0.1 per cent, down from 0.9 per cent last quarter. Last lower in quarter 4 2010 (-1.7 per cent). Quarterly rate 0.3 per cent, down from 0.9 per cent last quarter. Last lower in quarter 4 2011 (-1.3 per cent).

Sea & coastal water freight

Annual rate -3.3 per cent, down from -0.4 per cent last quarter. Last lower in quarter 1 2010 (-4.9 per cent). Quarterly rate -1.7 per cent, up from -3.2 per cent last quarter. Last higher in quarter 4 2011 (1.8 per cent).

Freight forwarding

Annual rate 0.0 per cent, down from 0.6 per cent last quarter. Last lower in quarter 4 2011 (-2.1 per cent). Quarterly rate 0.8 per cent, up from -0.1 per cent last quarter. Last higher in quarter 4 2011 (1.9 per cent).

Business rail fares

Annual rate 0.0 per cent, unchanged from last quarter. Quarterly rate 0.0 per cent, unchanged from last quarter.

Bus & coach hire

Annual rate 2.2 per cent, down from 2.6 per cent last quarter. Also 2.2 per cent in quarter 4 2011. Last lower in quarter 1 2011 (1.8 per cent). Quarterly rate 1.2 per cent, up from 0.7 per cent last quarter. Last higher in quarter 2 2011 (1.6 per cent).

Business air fares

Annual rate 4.5 per cent, down from 6.0 per cent last quarter. Last lower in quarter 1 2011 (2.9 per cent). Quarterly rate 1.5 per cent, up from 0.0 per cent last quarter. Last higher in quarter 3 2011 (1.8 per cent).

Maintenance & repair of motor vehicles

Annual rate 2.0 per cent, up from 1.8 per cent last quarter. Last higher in quarter 4 2011 (4.6 per cent). Quarterly rate 0.8 per cent, up from 0.2 per cent last quarter. Also 0.8 per cent in quarter 3 2011. Last higher in quarter 1 2011 (3.0 per cent).

Business telecommunications

Annual rate -2.9 per cent, up from -3.7 per cent last quarter. Last higher in quarter 4 2011 (-2.0 per cent). That is 12 consecutive negative annual rates. Quarterly rate 0.4 per cent, up from -1.8 per cent last quarter. Last higher in quarter 4 2011 (1.0 per cent).

Construction plant hire

Annual rate -1.0 per cent, down from -0.1 per cent last quarter. Last lower in quarter 3 2010 (-1.4 per cent). Quarterly rate 0.1 per cent, up from -2.4 per cent last quarter. Last higher in quarter 3 2011 (3.9 per cent).

Computer services

Annual rate 0.7 per cent, unchanged from the last two quarters. Last higher in quarter 2 2011 (0.9 per cent). Quarterly rate 0.0 per cent, down from 0.3 per cent last quarter. Also 0.0 per cent in quarter 3 2011. Last lower in quarter 2 2008 (-1.5 per cent).

Market research

Annual rate 0.6 per cent, up from 0.5 per cent last quarter. Last higher in quarter 4 2011 (0.7 per cent). Quarterly rate 0.1 per cent, down from 0.4 per cent last quarter. Also 0.1 per cent in quarter 4 2011. Last lower in quarter 3 2011 (0.0 per cent).

Technical testing

Annual rate 2.4 per cent, up from 1.8 per cent last quarter. Last higher in quarter 1 2007 (2.7 per cent). Quarterly rate 0.6 per cent, down from 1.8 per cent last quarter. Last lower quarter 4 2011 (0.0 per cent).

Publishing services

Annual rate 3.9 per cent, unchanged from last quarter. Last lower in quarter 1 2011 (3.8 per cent). Quarterly rate 0.4 per cent, down from 2.0 per cent last quarter. Also 0.4 per cent in quarter 2 2011. Last lower in quarter 3 2010 (0.2 per cent).

Advertising placement

Annual rate 4.1 per cent, down from 9.4 per cent last quarter. Last lower in quarter 2 2011 (3.1 per cent). Quarterly rate 0.1 per cent, down from 2.6 per cent last quarter. Last lower in quarter 3 2011 (-1.7 per cent).

Employment agencies

Annual rate 0.0 per cent, up from -0.1 per cent last quarter. Last higher in quarter 4 2011 (0.3 per cent). Quarterly rate 0.2 per cent, up from -0.1 per cent last quarter. Last higher in quarter 1 2011 (0.3 per cent).

Security services

Annual rate 0.3 per cent, down from 0.5 per cent last quarter. Last lower in quarter 2 2011 (-4.3 per cent). Quarterly rate 0.1 per cent, up from 0.0 per cent last quarter. Last higher in quarter 4 2011 (0.2 per cent).

Industrial cleaning

Annual rate -0.1 per cent, down from 0.4 per cent last quarter. Last lower in quarter 2 2005 (-0.3 per cent). Quarterly rate -0.3 per cent, down from 0.4 per cent last quarter. Last lower in quarter 3 2011 (-0.5 per cent).

Contract packaging

Annual rate 0.7 per cent, up from -0.3 per cent last quarter. Last higher in quarter 4 2009 (3.8 per cent). Quarterly rate 0.3 per cent, down from 0.4 per cent last quarter. Last lower in quarter 4 2011 (0.1 per cent).

Direct marketing & secretarial services

Annual rate 0.6 per cent, down from 1.0 per cent last quarter. Also 0.6 per cent in quarter 4 2011. Last lower in quarter 4 2010 (0.4 per cent). Quarterly rate 0.1 per cent, down from 0.6 per cent last quarter. Last lower in quarter 4 2011 (-0.2 per cent).

Translating & interpreting services

Annual rate 0.0 per cent, up from -1.0 per cent last quarter. Also 0.0 per cent in quarter 2 2011. Last higher in quarter 3 2009 (0.4 per cent). Quarterly rate 0.1 per cent, up from 0.0 per cent last quarter. Last higher in quarter 1 2009 (0.2 per cent).

Adult education

Annual rate 2.1 per cent, down from 2.8 per cent last quarter. Last lower in quarter 4 2011 (0.5 per cent). Quarterly rate 0.1 per cent, down from 3.0 per cent last quarter. Last lower in quarter 3 2011 (-1.3 per cent).

Commercial washing & dry cleaning

Annual rate 1.3 per cent, up from 0.9 per cent last quarter. Last higher in quarter 4 2011 (1.4 per cent). Quarterly rate 0.6 per cent, unchanged from last quarter. Last higher in quarter 1 2011 (1.0 per cent).

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. SPPI Development

   A development project to increase the industrial coverage of the SPPI has been in place since 2009. Recently the project has focused 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 25th August 2012, this article will include experimental new price indices for these industries. The article will appear in the publications area of the Services Producer Price Index subtopic of the ONS website.

    

   Articles summarising the findings for quarters 2, 3 and 4.

    

3. Results of the 2010 Services Turnover Survey

   The Services Turnover Survey (STS) is a survey of business-to-business turnover by service product, conducted every five years to support the rebasing of the Services Producer Price Index (SPPI).

   Total estimates of business-to-business turnover at industry level and as a proportion of overall turnover are collected, broken down into individual services referred to as products. These products match those collected by the SPPI, which are themselves obtained by arranging the activities of a service industry into a hierarchal structure of product groups, sub-products and items. Each item is assigned an index number and these indices are given a percentage weight calculated from information obtained by the STS. The latest STS, covering 2010, was despatched in July 2011, with an article summarising the STS results published on the ONS website on 15th June 2012.

4. Quality and Methodology Information

   A Quality and Methodology Information (QMI) (139.3 Kb Pdf) paper for the SPPI describes, in detail, the intended uses of the statistics presented in this Statistical Bulletin, their general quality and the methods used to produce them.

5. Implementation of SIC 2007 in ONS: Update on SPPI

   Services Producer Prices has implemented the change to the Standard Industrial Classification 2007 (SIC 2007). The most significant change to SPPI involved the reclassification of ‘recovered secondary raw materials’ and ‘publishing’. These are no longer classified in the manufacturing sector, but are now classified under services. For further information on the changes and impact of the SIC 2007 on the SPPI please see the Economic and Labour Market Review for December 2010 (84.1 Kb Pdf) .

    

   Any comments about this work and its impact on the SPPI please email Business Prices

6. Sorted Recovered Materials Services

   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.

7. Relevance to users

   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 on the Monitoring & Assessment area of the UK Statistics Authority website (Assessment Report 25).

    

   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.

    

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

    

   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

   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)”.

8. Accuracy

   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.

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. 

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    © Crown copyright 2012.

    Next publication:

    21 November 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

    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.

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