Producer price inflation, UK: April 2022

Changes in the prices of goods bought and sold by UK manufacturers, including price indices of materials and fuels purchased (input prices) and factory gate prices (output prices).

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Contact:
Email Brogan Taylor

Release date:
18 May 2022

Next release:
22 June 2022

1. Main points

  • The headline rate of output prices showed positive growth of 14.0% on the year to April 2022, up from 11.9% in March 2022; this is the highest the rate has been since July 2008.

  • The headline rate of input prices showed positive growth of 18.6% on the year to April 2022, which is unchanged from March 2022; this is the highest the rate has been since records began.

  • Food products, and metals and non-metallic minerals provided the largest upward contributions to the annual rates of output and input inflation, respectively.

  • The headline output index has been extended back to 1974 using previously published data, while the headline input index has been extended back to 1984; more information can be found in Section 5: Measuring the data.

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2. Analysis

Producer price inflation (PPI) output prices

On the month, the rate of output inflation was 2.3% in April 2022, up from 1.9% in March 2022 (Table 1). This is the highest the monthly rate has been since May 2008.

Of the 10 product groups, nine showed upward contributions to the annual rate in April 2022. Food products provided the largest upward contribution of 3.05 percentage points to the annual rate (Figure 2) and had annual price growth of 8.8% in April 2022 (Table 2). This is the highest the annual rate has been for food products since September 2011 and was mainly driven by preserved meat and meat products for domestic market.

Despite providing a downward contribution to the annual rate, the annual rate for tobacco and alcohol products increased by 1.4% between March 2022 and April 2022. The downward contribution is driven by weight changes implemented as part of the move to annual chain-linking. More information is available in our Chain-linking in business prices article. You can find out more about how these rates are calculated in Section 5: Measuring the data.

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PPI output - change in the annual rate

The annual rate of output inflation increased by 2.1 percentage points from 11.9% in March 2022 to 14.0% in April 2022.

Of the 10 product groups, nine showed upward contributions to the change in the annual rate, with petroleum products and food products providing the largest, at 0.74 and 0.42 percentage points, respectively (Figure 3).

The monthly rate of 17.4% for petroleum products between March 2022 and April 2022 is higher than the 1.1% between the same months a year ago; this has pulled the annual rate up by 25.7 percentage points from 59.4% in March 2022 to 85.1% in April 2022 (see our dataset: Growth rates of output and input PPI). This monthly increase in petroleum products was driven by refined petroleum products for domestic market and is a time lag from the rise in crude oil prices seen in March 2022.

PPI input prices

On the month, the rate of input inflation was 1.1% in April 2022, down from 4.6% in March 2022 (Table 3). This is the first time the monthly rate has slowed since December 2021.

The monthly rate of imported inputs slowed by 4.1 percentage points, from 4.9% in March 2022 to 0.8% in April 2022. The annual rate also slowed, from 14.6% in March 2022 to 14.1% in April 2022 (Table 4). This is the first time the annual and monthly rates have slowed since January 2022 and December 2021, respectively.

The largest upward contribution to the annual input inflation rate came from metals and non-metallic minerals, which contributed 3.97 percentage points (Figure 4). This product group had positive annual price growth of 19.9% in April 2022 (Table 5), although this was down from 20.2% in March 2022.

PPI input - change in the annual rate

The annual rate of input inflation was 18.6% in April 2022, which is unchanged from March 2022. The March 2022 annual rate of 18.6% has been revised down from the first published estimate of 19.2% last month. This annual rate of 18.6% in March and April 2022 is the highest since records began in January 1985.

While there is no change in the input annual rate, 8 of the 10 product groups showed upward contributions to the change in the annual rate, which were entirely offset by downward contributions from crude oil, and metals and non-metallic minerals (Figure 5).

Home food materials and other produced materials had the largest upward contributions to change in the annual rate, both at 0.30 percentage points.

Inputs of fuel had the third-largest upward contribution to the change in the annual rate, at 0.27 percentage points, with annual growth of 42.1% in April 2022, which is up from 32.0% in March 2022. This was driven in part by manufactured gas for domestic market. The annual rate for this index was 78.1% in April 2022.

Crude oil had the largest downward contribution to the change in the annual rate, at 1.26 percentage points. The annual rate for crude oil was 68.4% in April 2022, which is down by 23.7 percentage points from 92.1% in March 2022 (see our dataset: Growth rates of output and input PPI). The slowing down of the annual rate was driven by negative monthly growth of 11.5% between March 2022 and April 2022 (Table 5).

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3. Producer price inflation data

Producer price inflation time series
Dataset | Released 18 May 2022
A comprehensive selection of data on input and output indices. Contains producer price indices of materials and fuels purchased and output of manufacturing industry by broad sector.

Output and input producer price inflation: contributions to the 12-month rates
Dataset | Released 18 May 2022
Contributions to the 12-month rates of input and output producer price inflation by component and overall rates.

Producer price inflation
Dataset MM22 | Released 18 May 2022
UK price movement data at all manufacturing, aggregated industry and product group level. Data supplied from individual manufacturers, importers and exporters. Monthly, quarterly and annual data.

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4. Glossary

Weight

This is the importance of the price of interest relative to other prices collected. With annual chain-linking, this is updated every year using business turnover data.

Index value

Price level in a specific basket of goods.

Annual growth rate

The annual inflation rate.

Link factor

A smoothing factor applied to create a continuous series following a weights change.

Contribution

A measure of influence that the index has on the overall growth rate. This depends on both the magnitude of the weight and the inflation rate. A positive contribution is an index that is driving a change in the annual growth rate value. Where the contribution is positive but the growth is negative, this indicates that the index is reducing the annual growth rate (for example, the growth rate would be higher if this index had a lower weight).

Producer price inflation

Changes in the prices of goods bought and sold by UK manufacturers, including price indices of materials and fuels purchased (input prices) and factory gate prices (output prices).

Output prices

The factory gate price (output price) is the amount received by UK producers for the goods that they sell to the domestic market. It includes the margin that businesses make on goods, in addition to costs such as labour, raw materials and energy, as well as interest on loans, site or building maintenance, or rent.

Input prices

The input price measures the price of materials and fuels bought by UK manufacturers for processing. It includes materials and fuels that are both imported or sourced within the domestic market. It is not limited to materials used in the final product but includes what is required by businesses in their normal day-to-day running, such as fuels.

Services producer price inflation

Quarterly estimates monitoring the changes in prices charged for services provided to UK-based customers for a range of industries.

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5. Measuring the data

Producer price inflation (PPI) uses contributions to identify how indices influence the overall inflation rate. This section gives additional information on the calculation and how to interpret it.

Example scenarios

The following gives examples of how weight and inflation rate changes most commonly affect the contribution. In PPI, the weights usually have greater influence on the contribution as these tend to show greater change than the annual inflation rate.

  • Decrease in weight and in inflation rate - contribution is negative

  • Decrease in weight, increase in inflation rate - contribution is usually negative

  • No change in weight or inflation rate - no change

  • No change in weight, increase in inflation rate - no change

  • Increase in weight, decrease in inflation rate - contribution is usually positive

  • Increase in weight, no change in inflation rate - contribution is positive

  • Increase in weight, increase in inflation rate - contribution is positive

Contributions are calculated using the following formula:


Quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in our Producer Price Index (PPI) Quality and Methodology Information report and our Services Producer Price Indices (SPPI) Quality and Methodology information report.

Other useful documentation for the PPI and the SPPI are:

Extension of back series

Prior to today's release the existing back series of headline output (GB7S) and input (GHIP) data were available back to 1996. Today's release sees an extension to these back series by making historical data readily available. PPI data going back to January 1974 has been stored digitally and so this publication sees the release of these index values, linked together and re-referenced to 2015 equals 100, for the headline PPI output series (GB7S).

For headline input (GHIP), this publication sees the release of a back series to January 1984. Unlike the headline output index, the input headline was first introduced in the early 1990s, with the index data starting from 1984, hence the difference in available back series between the two headline indices.

Annual growth rates for the output and input back series are displayed in figures 6 and 7 respectively.

The addition of these back series do not affect the methodology used to calculate our previous data to 1996. For the periods January 1974 to December 1995 we have rescaled data from a number of historical rebased series to make these comparable with our previously published data.

The addition of these historical back series extends our understanding of the narrative around UK manufacturing, allowing the current data to be viewed within a much longer context.

Sterling effective exchange rate

The sterling effective exchange rate measures changes in the strength of sterling relative to basket of other currencies. The sterling effective exchange rate is only indicative of the rates applied to producer prices. This is because the sterling effective exchange rate is a trade-weighted index that represents all UK trade, whereas producer prices reflect transactions in the manufacturing sector.

Economic statistics governance after EU exit

Following the UK's exit from the EU, new governance arrangements are being put in place that will support the adoption and implementation of high-quality standards for UK economic statistics. These governance arrangements will promote international comparability and add to the credibility and independence of the UK's statistical system.

At the centre of this new governance framework will be the new National Statistician's Committee for Advice on Standards for Economic Statistics (NSCASE). NSCASE will support the UK by ensuring its processes for influencing and adopting international statistical standards are world leading. The advice NSCASE provides to the National Statistician will span the full range of domains in economic statistics, including the national accounts, fiscal statistics, prices, trade and the balance of payments and labour market statistics.

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6. Strengths and limitations

Strengths

  • These data provide users with valuable insight into the changes in the process of goods and services bought and sold by UK manufacturers.

  • Our data are comprehensive, covering many products at a much greater level of detail than other surveys.

Limitations

  • Some products are produced by only a small number of manufacturers, meaning that there may not be enough manufacturers for a detailed and robust analysis, and the sector may be volatile, requiring some estimation.

  • The data can be revised for 12 months.

  • The data for the latest two months of the Producer Price Index (PPI) and two quarters of the Services Producer Price Index (SPPI) are provisional.

Coronavirus (COVID-19) in April 2022

Response rates for the domestic PPI and Export Price Index (EPI) show an increase between March 2022 and April 2022, whereas the response rates for the Import Price Index (IPI) show a decrease between March 2022 and April 2022 (Table 6).

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Contact details for this Statistical bulletin

Brogan Taylor
business.prices@ons.gov.uk
Telephone: +44 1633 456907