Table of contents
1. Main points
Producer input prices fell by 2.3% in the year to August 2023, up from a revised fall of 3.2% in the year to July 2023.
Producer output (factory gate) prices fell by 0.4% in the year to August 2023, up from a revised fall of 0.7% in the year to July 2023.
On a monthly basis, producer input prices rose by 0.4% and output prices rose by 0.2% in August 2023.
Crude oil and petroleum products provided the largest downward contributions to the annual rates of input and output inflation, respectively.
While annual producer price inflation rates have recently turned negative, with prices in some sectors falling, the index levels for both input and output prices remain substantially higher than their 2021 levels.
2. Producer price inflation rates
The annual inflation rate of the input Producer Price Index (PPI) was negative for the third consecutive month. However, there is a month-on-month rise in the rate for the first time since reaching its record high in June 2022 (Figure 1).
The annual inflation rate of the output PPI was negative for the second consecutive month, although this too has seen a month-on-month rise in the rate for the first time since July 2022.
The index levels for both input and output prices have remained high since July 2022 (Figure 2). The small decreases seen in the past few months, when compared with the broadly stable values over the past year, have created a fall in the annual inflation rate, even though the index levels remain high (Figure 1). We explain this in further detail in our Beware base effects blog post.
Figure 1: Annual input and output PPI inflation rates both remained negative in August 2023 but showed slight increases relative to July
Input and output Producer Price Index (PPI) annual inflation rates, UK, August 2013 to August 2023
Source: Producer Price Index (PPI) from the Office for National Statistics
Download this chart Figure 1: Annual input and output PPI inflation rates both remained negative in August 2023 but showed slight increases relative to July
Image .csv .xls
Figure 2: The input and output PPI levels both rose slightly in August 2023
Input and output Producer Price Index (PPI) values, UK, August 2013 to August 2023
Source: Producer Price Index (PPI) from the Office for National Statistics
Download this chart Figure 2: The input and output PPI levels both rose slightly in August 2023
Image .csv .xls3. Input producer price inflation
The annual inflation rate of producer input prices increased by 0.9 percentage points from negative 3.2% in July 2023 to negative 2.3% in August 2023 (Table 1).
The monthly producer input inflation increased by 0.4% in August 2023, following a fall of 0.4% in July 2023 (Table 1). The last time the monthly rate was positive was in March 2023. The figures for both July and August 2023 are provisional; therefore, they may be subject to small revisions as additional survey data are returned and validated.
PPI Index (2015=100) | Monthly rate | Annual rate | Change in the annual rate (percentage points) | ||
---|---|---|---|---|---|
2022 | Aug | 151.3 | -0.6 | 21.3 | -1.4 |
Sep | 152.8 | 1.0 | 21.2 | -0.1 | |
Oct | 154.2 | 0.9 | 20.0 | -1.2 | |
Nov | 153.8 | -0.3 | 17.6 | -2.4 | |
Dec | 152.0 | -1.1 | 16.1 | -1.5 | |
2023 | Jan | 152.7 | 0.4 | 14.6 | -1.5 |
Feb | 151.9 | -0.5 | 12.3 | -2.3 | |
Mar | 152.2 | 0.2 | 7.0 | -5.3 | |
Apr | 151.8 | -0.3 | 3.8 | -3.2 | |
May | 149.7 | -1.3 | 0.3 | -3.5 | |
Jun | 147.9 | -1.2 | -2.8 | -3.1 | |
Jul | 147.3 | -0.4 | -3.2 | -0.4 | |
Aug | 147.9 | 0.4 | -2.3 | 0.9 |
Download this table Table 1: Input prices, index values, inflation rates and percentage point change to the annual inflation rate
.xls .csvThe largest downward contribution to the annual input inflation rate in August 2023 came from inputs of crude oil, which contributed 1.76 percentage points (Figure 3). Overall prices in this product group saw a fall of 21.8% in the year to August 2023 (Table 2), up notably from a fall of 38.4% in the year to July. This reflects high global demand coinciding with increasing supply cuts.
Inputs of metals and non-metallic minerals, as well as inputs of chemicals, provided the second and third largest downward contributions, at 1.10 and 1.04 percentage points, respectively.
There are also offsetting upward contributions from some product groups. Inputs of other parts and equipment and inputs of fuel provided the largest upward contributions, at 1.31 and 0.88 percentage points, respectively.
As indicated in our Classification review of the Energy Bills Discount Scheme statement, the data relating to the inputs of fuel now reflect the impact of the Energy Bills Discount Scheme (EBDS), which took effect from May 2023.
Figure 3: Crude oil provided the largest downward contribution to the annual inflation rate of input PPI in August 2023
Input Producer Price Index (PPI), contribution to monthly and annual inflation rate, UK, August 2023
Source: Producer Price Index (PPI) from the Office for National Statistics
Notes:
- Contributions to the rate may not add up to the rate exactly because of rounding.
Download this chart Figure 3: Crude oil provided the largest downward contribution to the annual inflation rate of input PPI in August 2023
Image .csv .xls
Percentage change | Percentage change | |||
---|---|---|---|---|
July 2023 | August 2023 | |||
Product group | Monthly Rate | Annual Rate | Monthly Rate | Annual Rate |
Beverages and tobacco | 0.4 | 13.7 | -0.1 | 11.3 |
Fuel | -2.7 | 34.0 | -1.9 | 22.9 |
Crude petroleum and natural gas; Metal ores | 1.6 | -38.4 | 12.1 | -21.8 |
Food (Domestic) | -0.8 | 0.6 | -0.8 | 0.5 |
Food (Imported) | 0.4 | 15.8 | 0.6 | 15.1 |
Other produced material | 0.5 | -8.5 | 1.0 | -7.0 |
Metals and non-metallic mineral products | -0.6 | -3.0 | -0.1 | -2.8 |
Chemicals | -0.6 | -5.3 | -0.8 | -6.5 |
Other parts and equipment | -0.5 | 3.5 | 0.2 | 2.1 |
Other inputs | -0.1 | 4.2 | 0.0 | 4.0 |
Manufactured products | -0.4 | -3.2 | 0.4 | -2.3 |
Download this table Table 2: Input prices, inflation rates
.xls .csvOf the 10 product groups for input Producer Price Index (PPI), 3 showed upward contributions to the change in the annual inflation rate, with crude oil providing the largest, at 1.53 percentage points (Figure 4).
Crude oil prices rose by 12.1% between July and August 2023, seeing the annual inflation rate for crude oil slow from a fall of 38.4% in July to a fall of 21.8% in August.
Figure 4: Crude oil provided the largest upward contribution to the change in the annual inflation rate of input PPI
Input Producer Price Index (PPI), contribution to change in the annual inflation rate, UK, August 2023
Source: Producer Price Index (PPI) from the Office for National Statistics
Notes:
- Contributions to the rate may not add up to the rate exactly because of rounding.
Download this chart Figure 4: Crude oil provided the largest upward contribution to the change in the annual inflation rate of input PPI
Image .csv .xlsThe prices of materials and fuels imported by UK manufacturing rose by 1.5% between July and August 2023, up from a fall of 0.5% between June and July. As a result, the annual inflation rate fell by 2.0% in August, up from the fall of 2.9% seen in July (Table 3).
PPI Index (2015=100) | Monthly rate | Annual rate | Change in the annual rate (percentage points) | Sterling Index (Jan 2005=100) | Monthly rate | Annual rate | ||
---|---|---|---|---|---|---|---|---|
2022 | Aug | 143.8 | 0.5 | 20.8 | 1.2 | 79.1 | 0.2 | -3.5 |
Sep | 149.7 | 4.2 | 24.4 | 3.6 | 76.3 | -3.5 | -6.4 | |
Oct | 150.7 | 0.6 | 24.3 | -0.1 | 77.0 | 0.8 | -6.2 | |
Nov | 147.1 | -2.4 | 19.8 | -4.5 | 78.1 | 1.5 | -4.1 | |
Dec | 144.0 | -2.1 | 16.6 | -3.2 | 79.0 | 1.2 | -2.9 | |
2023 | Jan | 145.5 | 1.0 | 17.3 | 0.7 | 78.3 | -1.0 | -5.3 |
Feb | 146.1 | 0.4 | 14.7 | -2.6 | 77.8 | -0.6 | -5.8 | |
Mar | 145.1 | -0.6 | 8.5 | -6.2 | 78.3 | 0.6 | -4.3 | |
Apr | 143.7 | -1.0 | 5.2 | -3.3 | 79.3 | 1.3 | -2.4 | |
May | 141.8 | -1.3 | 1.1 | -4.1 | 80.1 | 1.0 | 0.3 | |
Jun | 139.6 | -1.5 | -2.7 | -3.8 | 81.7 | 2.0 | 3.0 | |
Jul | 138.9 | -0.5 | -2.9 | -0.2 | 82.6 | 1.1 | 4.6 | |
Aug | 140.9 | 1.5 | -2.0 | 0.9 | 82.3 | -0.3 | 4.1 |
Download this table Table 3: Imported materials and fuels purchased and sterling effective exchange rate, index values, inflation rates and percentage point change to the annual inflation rate
.xls .csv4. Output producer price inflation
The annual inflation rate of producer output (factory gate) prices increased by 0.3 percentage points from a fall of 0.7% in July 2023 to a fall of 0.4% in August. This was the second consecutive month that the rate has been negative, but the first month-on-month rise in the annual rate since July 2022.
Producer output inflation increased by 0.2% between July and August 2023, unchanged from the inflation rate between June and July 2023 (Table 4).
PPI Index (2015=100) | Monthly rate | Annual rate | Change in the annual rate (percentage points) | ||
---|---|---|---|---|---|
2022 | Aug | 136.2 | 0.0 | 18.8 | -0.8 |
Sep | 136.2 | 0.0 | 18.1 | -0.7 | |
Oct | 137.5 | 0.9 | 17.2 | -0.9 | |
Nov | 137.2 | -0.2 | 15.8 | -1.4 | |
Dec | 136.1 | -0.8 | 14.4 | -1.4 | |
2023 | Jan | 136.8 | 0.5 | 13.3 | -1.1 |
Feb | 136.2 | -0.4 | 11.7 | -1.6 | |
Mar | 136.3 | 0.0 | 8.4 | -3.3 | |
Apr | 136.1 | -0.1 | 5.2 | -3.2 | |
May | 135.2 | -0.6 | 2.8 | -2.4 | |
Jun | 135.0 | -0.2 | 0.3 | -2.5 | |
Jul | 135.3 | 0.2 | -0.7 | -1.0 | |
Aug | 135.6 | 0.2 | -0.4 | 0.3 |
Download this table Table 4: Output prices, index values, inflation rates and percentage point change to the annual inflation rate
.xls .csvThe largest downward contribution to the annual output inflation rate in August 2023 came from refined petroleum products, which contributed 3.54 percentage points (Figure 5). This product group saw a price fall of 30.0% in the year to August (Table 5), up from a 38.4% fall in the year to July.
Despite providing the second-largest downward contribution to the annual rate, metal prices increased by 1.9% in the year to August 2023. The downward contribution was caused by the 2023 weight for this product group being lower than its weight in 2022. We provide more information in our Chain-linking in business prices article and in Section 5 of our Producer price inflation, UK: February 2023 bulletin.
The largest offsetting upward contribution to the annual output inflation rate in August 2023 came from other outputs from manufacturing, which contributed 1.22 percentage points.
Figure 5: Petroleum provided the largest downward contribution to the annual inflation rate of output PPI in August 2023
Output Producer Price Index (PPI), contribution to monthly and annual inflation rate, UK, August 2023
Source: Producer Price Index (PPI) from the Office for National Statistics
Notes:
- Contributions to the rate may not add up to the rate exactly because of rounding.
Download this chart Figure 5: Petroleum provided the largest downward contribution to the annual inflation rate of output PPI in August 2023
Image .csv .xls
Percentage change | Percentage change | |||
---|---|---|---|---|
July 2023 | August 2023 | |||
Product group | Monthly Rate | Annual Rate | Monthly Rate | Annual Rate |
Food products | -0.3 | 6.5 | -0.6 | 5.1 |
Alcoholic beverages and tobacco products | -1.3 | 15.0 | 0.7 | 11.7 |
Textiles, wearing apparel and leather products | 0.3 | 6.6 | 0.0 | 6.5 |
Paper, paper products and printed material | -0.4 | 1.7 | -0.1 | 0.9 |
Coke and refined petroleum products | 3.7 | -38.4 | 7.7 | -30.0 |
Chemicals and pharmaceutical preparations | -0.4 | -6.1 | -1.0 | -8.9 |
Basic metals, fabricated metal products and machinery | 0.7 | 2.0 | 0.0 | 1.9 |
Computer, electronic and electrical products | -0.2 | 4.0 | -0.7 | 3.1 |
Motor vehicles and other transport equipment | -0.2 | 1.9 | 0.2 | 1.6 |
Other outputs | 0.4 | 5.8 | -0.1 | 5.0 |
Manufactured products | 0.2 | -0.7 | 0.2 | -0.4 |
Download this table Table 5: Output prices, inflation rates
.xls .csvOf the 10 product groups, only petroleum products showed an upward contribution to the change in the annual inflation rate, at 1.42 percentage points (Figure 6). This upwards contribution was greater in magnitude than the sum of the contributions of the other product groups.
Figure 6: Petroleum products provided the only upwards contribution to the change in the annual output inflation rate
Output Producer Price Index (PPI), contribution to change in the annual inflation rate, UK, August 2023
Source: Producer Price Index (PPI) from the Office for National Statistics
Notes:
- Contributions to the rate may not add up to the rate exactly because of rounding.
Download this chart Figure 6: Petroleum products provided the only upwards contribution to the change in the annual output inflation rate
Image .csv .xls5. Producer price inflation data
Producer price inflation time series
Dataset | Released 20 September 2023
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 annual rates
Dataset | Released 20 September 2023
Contributions to the annual inflation rates of input and output producer price inflation by component and overall inflation rates.
Producer price inflation
Dataset MM22 | Released 20 September 2023
UK price movement data at all manufacturing, aggregated industry and product group levels. Data supplied from individual manufacturers, importers and exporters. Monthly, quarterly and annual data.
6. OSR assessment of the Producer Price Indices (PPI)
The Office for Statistics Regulation (OSR) quality report of the Producer Price Indices (PPI) was published in July 2023. The report notes the excellent progress made recently in bringing PPI in line with methodological best practice, but also highlights areas that need to be improved.
Steps are already being taken to address the requirements of the report. In the coming months, we will update users on our plans to address the issues raised in this report.
Read the full OSR report.
Back to table of contents7. 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).
If the producer price inflation rate is a positive value, this indicates that prices have risen, while a negative value indicates that prices have fallen.
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.
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.
Services producer price inflation
Quarterly estimates monitoring the changes in prices charged for services provided to UK-based customers for a range of industries.
Back to table of contents8. Measuring the data
The Producer Price Index (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 - contribution is usually positive
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 (QMI) on strengths, limitations, appropriate uses, and how the data were created is available in our Producer price indices QMI and our Services Producer Price Inflation QMI.
Other useful documentation from the Office for National Statistics for the PPI and the Services Producer Price Index (SPPI) are:
Sterling effective exchange rate
The sterling effective exchange rate measures changes in the strength of sterling relative to baskets 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.
Data revisions policy
Figures for the latest two months are provisional, and the latest 12 months are subject to revisions because of late and revised respondent data. The PPI revision policy is now in line with that of the national accounts. Published information on the revisions policy and revisions triangles shows how estimates are revised over time.
Back to table of contents9. Strengths and limitations
Strengths
These data:
provide users with valuable insight into the changes in the prices of goods and services bought and sold by UK manufacturers
are comprehensive, covering many products at a much greater level of detail than other surveys
are internationally comparable with any country using the classification by product activity (CPA) or the central product classification (CPC) systems
are created using a rotational sampling method to enable many new products and new respondents to be included
are chain-linked annually to improve results in deflation by reducing substitution bias
Limitations
The limitations are that:
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
Response rates in August 2023
The response rate for the domestic PPI, Import Price Index (IPI) and Export Price Index (EPI) all increased between July and August 2023 (Table 6).
PPI (domestic) | IPI | EPI | |
---|---|---|---|
August 2022 | 71.6 | 71.6 | 72.0 |
September 2022 | 71.9 | 74.8 | 78.2 |
October 2022 | 73.3 | 61.3 | 71.6 |
November 2022 | 78.0 | 73.3 | 71.7 |
December 2022 | 78.2 | 72.9 | 73.7 |
January 2023 | 77.9 | 71.7 | 73.9 |
February 2023 | 78.1 | 78.9 | 78.2 |
March 2023 | 77.8 | 75.4 | 74.7 |
April 2023 | 78.9 | 79.3 | 74.6 |
May 2023 | 78.3 | 82.2 | 75.8 |
June 2023 | 76.1 | 80.4 | 77.7 |
July 2023 | 74.8 | 82.4 | 72.2 |
August 2023 | 79.0 | 83.9 | 77.3 |
Download this table Table 6: Producer Price Index (PPI), Import Price Index (IPI) and Export Price Index (EPI) overall effective response rates at time of first publishing
.xls .csv11. Cite this statistical bulletin
Office for National Statistics (ONS), released 20 September 2023, ONS website, statistical bulletin, Producer price inflation, UK: August 2023