Statistical bulletin: Producer Price Index - January 2012

Key Points

• In the year to January 2012 the output price index for home sales of manufactured products rose 4.1 per cent, compared with a rise of 4.8 per cent last month. This is the lowest annual rate since November 2010, when the index also rose 4.1 per cent.
• Between December and January the output index for home sales of manufactured products rose 0.5 per cent.
• In the year to January 2012 the output price index excluding food, beverages, tobacco & petroleum rose 2.4 per cent. This is the lowest annual rate since February 2010, when the index rose 2.2 per cent.
• In the year to January 2012 the total input price index rose 7.0 per cent, compared with a rise of 8.9 per cent last month. This is the lowest annual rate since November 2009, when the index rose 3.9 per cent.
• Between December and January the total input price index rose 0.5 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 January 2012, movements in output prices for UK manufactured products were as follows:

• The output price index for home sales of manufactured products rose 4.1 per cent, compared with a rise of 4.8 per cent last month. This is the lowest annual rate since November 2010, when the index also rose 4.1 per cent. The last time the annual rate was lower was in October 2010, when the index rose 4.0 per cent.

• The output price index excluding food, beverages, tobacco & petroleum rose 2.4 per cent, compared with a rise of 3.0 per cent last month. This is the lowest annual rate since February 2010, when the index rose 2.2 per cent.

• The output price index excluding excise duty rose 4.1 per cent, compared with a rise of 4.8 per cent last month. This is the lowest annual rate since December 2010, when the index rose 4.0 per cent.

 Between December and January:

• The output price index for home sales of manufactured products rose 0.5 per cent. This is the largest monthly increase since April 2011, when the index rose 1.1 per cent. There were price increases in tobacco & alcohol, petroleum products and clothing, textiles & leather products.

Output prices (home sales)

Percentage change (not seasonally adjusted)

		All manufactured products		Excluding food, beverages, tobacco & petroleum		All manufactured products excluding duty
		1 month	12 months	1 month	12 months	1 month	12 months
2011	Aug	0.0	6.0	0.1	3.5	0.1	6.2
	Sep	0.3	6.3	0.3	3.7	0.2	6.4
	Oct	0.0	5.7	-0.1	3.3	0.1	5.9
	Nov	0.2	5.4	-0.1	3.1	0.2	5.6
	Dec	-0.2	4.8	-0.1	3.0	-0.2	4.8
2012	Jan	0.5	4.1	0.3	2.4	0.4	4.1

Table source: Office for National Statistics

Input Prices: Summary

In the year to January 2012, 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 7.0 per cent, compared with a rise of 8.9 per cent last month. This is the lowest annual rate since November 2009, when the index rose 3.9 per cent.

• The input price index for the manufacturing industry excluding the food, beverages tobacco & petroleum industries rose 5.4 per cent, compared with a rise of 7.3 per cent last month. This is the lowest annual rate since March 2010, when the index rose 4.0 per cent.

Between December and January:

• The total input price index rose 0.5 per cent, mainly reflecting price rises in crude oil and other imported parts & equipment, partially offset by price falls in fuels (inc CCL) and other imported materials.

• In seasonally adjusted terms, the input price index for the manufacturing industry excluding the food, beverages tobacco & petroleum industries fell 0.2 per cent.

• The price of imported materials as a whole (including crude oil) rose 0.7 per cent.

 

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.

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 January 2012

Product group	Percentage change
Food products	5.5
Tobacco & alcohol	7.8
Clothing, textiles & leather	5.1
Paper & printing	3.1
Petroleum products	7.5
Chemicals & pharmaceuticals	1.3
Metal, machinery & equipment	3.0
Computer, electrical & optical	0.1
Transport equipment	1.3
Other manufactured products	3.1
All manufacturing	4.1

Table source: Office for National Statistics

 

1 month change to January 2012

Product group	Percentage change
Food products	0.1
Tobacco & alcohol	1.6
Clothing, textiles & leather	0.7
Paper & printing	0.3
Petroleum products	1.1
Chemicals & pharmaceuticals	0.3
Metal, machinery & equipment	-0.3
Computer, electrical & optical	0.3
Transport equipment	0.0
Other manufactured products	0.2
All manufacturing	0.5

Table source: Office for National Statistics

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 January 2012

Product group	Percentage change
Fuel incl. CCL	8.1
Crude oil	15.7
Home food materials	2.7
Imported food materials	5.1
Other home-prod. materials	2.6
Imported metals	-2.3
Imported chemicals	3.7
Imported parts & equipment	3.9
Other imported materials	6.8
All manufacturing	7.0

Table source: Office for National Statistics

1 month change to January 2012

Product group	Percentage change
Fuel incl. CCL	-2.0
Crude oil	2.1
Home food materials	0.2
Imported food materials	0.7
Other home-prod. materials	0.2
Imported metals	0.5
Imported chemicals	-0.1
Imported parts & equipment	0.4
Other imported materials	-0.5
All manufacturing	0.5

Table source: Office for National Statistics

Output Prices: Summary Of Statistics

The overall output price index rose 4.1 per cent in the year to January 2012, compared with a rise of 4.8 per cent in the year to December. This is the lowest annual rate since November 2010, when the index also rose 4.1 per cent. The last time the annual rate was lower was in October 2010, when the index rose 4.0 per cent. The output price index rose 0.5 per cent between December and January compared with a fall of 0.2 per cent between November and December. The monthly rise in the output index mainly reflected price increases in tobacco & alcohol products, petroleum products and clothing, textiles & leather products.

Tobacco & alcohol product prices rose 1.6 per cent between December and January and rose 7.8 per cent in the year to January. This is the highest annual rate since February 2009, when the index rose 8.2 per cent. The increase of 1.6 per cent on the month to January was mainly due to a 2.4 per cent increase in the price of beer (inc. duty) and a 1.6 per cent increase in the price of cider and other fruit wines (inc. duty). This in the highest monthly rise since April 2011, when the index rose by 2.9 per cent.

Petroleum product prices rose 1.1 per cent between December and January and rose 7.5 per cent in the year to January. 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 1.8 per cent increase in the price of diesel and gas oil.

Clothing, textiles & leather product prices rose 0.7 per cent between December and January and rose 5.1 per cent in the year to January. The monthly rise was mainly due to an increase of 0.8 per cent in the price of wearing apparel, except fur apparel and a 0.6 per cent increase in the price of other textiles, most notably carpets & rugs which increased by 2.0 per cent in the month.

Output price index excluding food, beverages, tobacco & petroleum

The output price index for manufactured products excluding food, beverages, tobacco & petroleum rose 2.4 per cent in the year to January, compared with a rise of 3.0 per cent in the year to December. This index is not affected by changes in excise duty. The index rose 0.3 per cent between December 2011 and January 2012 compared with a rise of 0.8 per cent between December 2010 and January 2011.

Output price index excluding excise duty

This index rose 4.1 per cent in the year to January, compared with a rise of 4.8 per cent in the year to December. Looking at the monthly index movements, the index rose 0.4 percent between December 2011 and January 2012, compared with a rise of 1.1 per cent between December 2010 and January 2011.

Input Prices: Summary Of Statistics

The overall input index rose 7.0 per cent in the year to January, compared with a rise of 8.9 per cent in the year to December. This is the lowest annual rate since November 2009, when the index rose 3.9 per cent.

The input index for all manufacturing rose 0.5 per cent between December 2011 and January 2012, compared with a rise of 2.3 per cent between December 2010 and January 2011. The monthly rise in the input index mainly reflecting price increases in crude oil and other imported parts & equipment offset by price decreases in fuels (inc CCL) and other imported materials.

Crude oil prices rose 2.1 per cent between December and January and rose 15.7 per cent in the year to January. This is the lowest annual rate since November 2010, when the index rose 15.6 per cent. 

Other imported parts & equipment product prices rose 0.4 per cent between December and January and rose 3.9 per cent in the year to January. The monthly rise was due to widespread increases across a broad range of products, most notably a 8.2 per cent rise in the price of imported computers & peripheral equipment and a 3.1 per cent rise in the price of imported optical instruments & photographic equipment; magnetic & optical media.

Fuel (inc CCL) prices fell 2.0 per cent between December and January. This is the largest monthly fall since April 2010, when the index fell 9.9 per cent. The index rose 8.1 per cent in the year to January. The monthly fall was due to decreases of 1.9 per cent and 2.4 per cent in the price of electricity and gas respectively.

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 fell 0.2 per cent in seasonally adjusted terms between December and January. The unadjusted index rose 5.4 per cent in the year to January, compared with a rise of 7.3 per cent in the year to December.

Output Prices: Records

All manufactured products

Annual rate 4.1%, down from 4.8% last month. Also 4.1% in November 2010. Last lower in October 2010 (4.0%). Monthly rate 0.5% up from -0.2% last month. Last higher in April 2011 (1.1%).

Excluding food, beverages, tobacco & petroleum

Annual rate 2.4%, down from 3.0% last month. Last lower in February 2010 (2.2%). Monthly rate 0.3% up from -0.1 last month. Also 0.3% in September 2011. Last higher in July 2011 (0.4%).

All manufactured products excluding duty

Annual rate 4.1%, down from 4.8% last month. Last lower in December 2010 (4.0%). Monthly rate 0.4% up from -0.2% last month. Last higher in April 2011 (0.9%).

Food products

Annual rate 5.5%, down from 7.1% last month. Last lower in January 2011 (5.3%). Monthly rate 0.1% unchanged from the last two months. Last lower in September 2010 (-0.2%).

Tobacco & alcohol (inc duty)

Annual rate 7.8%, up from 6.8% last month. Last higher in February 2009 (8.2%). Monthly rate 1.6% up from 0.2% last month. Last higher in April 2011 (2.9%).

Clothing, textiles & leather

Annual rate 5.1%, down from 5.6% last month. Also 5.1% in August 2011. Last lower in June 2011 (5.0%). Monthly rate 0.7% up from 0.2% last month. Last higher in April 2011 (1.6%).

Paper & printing

Annual rate 3.1%, down from 3.5% last month. Also 3.1% in July 2010. Last lower in June 2010 (2.5%). Monthly rate 0.3% up from 0.1% last month. Last higher in July 2011 (0.5%).

Petroleum products

Annual rate 7.5%, down from 10.0% last month. Last lower in October 2009 (-3.1%). Monthly rate 1.1% up from -1.4% last month. Last higher in April 2011 (1.6%).

Chemical & pharmaceutical products

Annual rate 1.3%, down from 3.3% last month. Last lower in July 2009 (1.1%). Monthly rate 0.3% up from -0.7% last month. Last higher in August 2011 (0.8%).

Metal, machinery & equipment nec

Annual rate 3.0%, down from 3.7% last month. Last lower in April 2010 (2.2%). Monthly rate -0.3%, down from 0.0% last month. Also -0.3% in July 2009. Last lower in June 2009 (-0.5%).

Computer, electrical & optical equipment

Annual rate 0.1%, down from 0.5% last month. Last lower in November 2011 (-1.1%). Monthly rate 0.3% up from 0.1% last month. Also 0.3% in September 2011. Last higher in January 2011 (0.6%).

Transport equipment

Annual rate 1.3%, up from 1.0% last month. Last higher in September 2011 (1.8%). Monthly rate 0.0% up from -0.1% last month. Last higher in September 2011 (0.3%).

Other manufactured products

Annual rate 3.1%, down from 3.3% last month. Also 3.1% in March and April 2011. Last lower in December 2010 (2.8%). Monthly rate 0.2% unchanged from last month. Also 0.2% in both August and September 2011. Last higher in July 2011 (0.3%).

Input Prices: Records

Materials & fuels purchased

Annual rate 7.0%, down from 8.9% last month. Last lower in November 2009 (3.9%). Monthly rate 0.5% up from -0.6% last month. Last higher September 2011 (2.1%).

Excluding food, beverages, tobacco & petroleum industries

Annual rate 5.4%, down from 7.3% last month. Last lower in March 2010 (4.0%). Monthly rate (seasonally adjusted) -0.2% up from -0.6% last month. Last higher in November 2011 (0.2%).

Fuel including climate change levy

Annual rate 8.1%, down from 8.3% last month. Last lower in July 2011 (7.7%). Monthly rate -2.0% down from 1.7% last month. Also -2.0% in May 2009. Last lower in April 2010 (-9.9%).

Crude oil

Annual rate 15.7%, down from 20.2% last month. Last lower in November 2010 (15.6%). Monthly rate 2.1% up from -1.8% last month. Last higher in September 2011 (6.4%).

Home food materials

Annual rate 2.7%, up from 2.4% last month. Last higher in November 2011 (6.1%).  Monthly rate 0.2% down from 1.0% last month. Last lower in October 2011 (-0.9%).

Imported food materials

Annual rate 5.1%, down from 6.6% last month. Last lower in October 2010 (4.4%). Monthly rate 0.7% up from 0.1% last month. Also 0.7% in September 2011. Last higher in June 2011 (1.2%).

Other home-produced materials

Annual rate 2.6%, down from 5.4% last month. Last lower in February 2011 (2.2%). Monthly rate 0.2% down from 0.3% last month. Last lower in November 2011 (-0.6%).

Imported metals

Annual rate -2.3%, down from 0.2% last month. Last lower in August 2009 (-5.9%). Monthly rate 0.5% up from -0.7% last month. Last higher in July 2011 (1.4%).

Imported chemicals

Annual rate 3.7%, down from 6.0% last month. Last lower in February 2010 (2.5%). Monthly rate -0.1% up from -1.2% last month. Last higher in September 2011 (0.9%).

Imported parts & equipment

Annual rate 3.9%, down from 4.2% last month. Last lower in March 2011 (1.9%). Monthly rate 0.4% up from -0.5% last month. Last higher in September 2011 (1.1%).

Other imported materials

Annual rate 6.8%, down from 9.7% last month. Last lower in April 2010 (4.5%). Monthly rate -0.5% up from -0.8% last month. Also -0.5% in November 2011. Last higher in October 2011 (0.2%).

Revisions

For this bulletin Reference Tables 8R and 9R (219.5 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 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 December 2005 and November 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 November 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) (1.59 Mb Excel sheet)

Revision triangle for total output (1 month) (1.57 Mb Excel sheet)

Revision triangle for total input (12 months) (1.61 Mb Excel sheet)

Revision triangle for total input (1 month) (1.6 Mb Excel sheet)

 

Background notes

1. 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. A response to this consultation can be found on the About ONS area of the ONS website (28.8 Kb Pdf) .

2. Summary Quality Report

   A Summary Quality Report 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 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 ppi@ons.gov.uk

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 (219.5 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) (219.5 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 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.

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 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.

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 (91.3 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:
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