Producer price inflation, UK: December 2024 including services, October to December 2024

• Producer input prices fell by 1.5% in the year to December 2024, up from a revised fall of 2.1% in the year to November.

• Producer output (factory gate) prices rose by 0.1% in the year to December 2024, up from a revised fall of 0.5% in the year to November.

• On a monthly basis, producer input prices and output (factory gate) prices both rose by 0.1% in December 2024.

• Inputs of other parts and equipment, and coke and refined petroleum products provided the largest upward contributions to change in the annual inflation rates for input and output prices, respectively.

• Services producer prices rose by 2.9% in the year to Quarter 4 (Oct to Dec) 2024, down from a revised increase of 3.7% in the year to Quarter 3 (July to Sept).

Producer input prices fell by 1.5% in the year to December 2024. This is up from a revised fall of 2.1% in the year to November (Figure 1). Monthly input prices rose by 0.1% in December 2024, following no change in November (Table 1).

Producer output (factory gate) prices rose by 0.1% in the year to December 2024. This is up from a revised fall of 0.5% in the year to November (Figure 1). Monthly output prices also rose by 0.1% in December 2024, following a revised monthly inflation rate of 0.4% in November (Table 1).

Estimates for both November and December 2024 are provisional. Figures for the latest 12 months are subject to revisions as additional survey data are returned and validated. Effective response rates at the time of first publishing can be found in Section 8: Data sources and quality.

Because of rounding, inflation rates in this bulletin may not correspond to index value changes, and contributions to the rate may not add up to the rate exactly.

Of the 10 product groups for the input Producer Price Index (PPI), 5 made downward contributions to the annual inflation rate in December 2024. The largest of these came from inputs of fuel and inputs of crude oil, which contributed negative 0.83 percentage points and negative 0.60 percentage points, respectively (Figure 2).

The prices of inputs of fuel fell by 15.0% in the year to December 2024, compared with a fall of 12.8% in the year to November (Table 2). Both electricity and gas prices fell in the year to December 2024, by 13.8% and 21.3%, respectively.

The price of inputs of crude oil fell by 10.2% in the year to December 2024, compared with a fall of 16.5% in the year to November (Table 2). This was mainly caused by crude petroleum prices, which fell by 13.7% in the year to December 2024.

Inputs of "other parts and equipment", and inputs of crude oil provided the largest contributions to the change in the annual inflation rate between November and December 2024, with upward contributions of 0.89 percentage points and 0.37 percentage points, respectively.

The change in crude oil prices was partly caused by a base effect, with monthly prices falling 5.8% in December 2023, compared with a monthly increase of 1.3% in December 2024. We explain this in further detail in our Beware base effects blog post.

The largest offsetting upward contribution to the annual inflation rate came from inputs of metals and non-metallic mineral products, which contributed 0.12 percentage points (Figure 2). Prices for this product group increased by 0.6% in the year to December 2024 (Table 2), which was partly caused by increased aluminium prices.

The prices of materials and fuels imported by UK manufacturers fell by 2.7% in the year to December 2024, following a revised fall of 4.5% in the year to November. On a monthly basis, prices were unchanged between November and December 2024, compared with a revised monthly inflation rate of 0.6% between October and November. The fall in import prices in the year to December 2024 may partly reflect the higher level of sterling, which rose by 3.3% in the same year (Table 3).

Of the 10 product groups for the output Producer Price Index (PPI), 7 made upward contributions to the annual inflation rate in December 2024. The largest of these came from "other outputs from manufacturing", and outputs of food products, which contributed 0.97 percentage points, and 0.68 percentage points, respectively (Figure 3).

Prices for "other outputs from manufacturing" rose by 1.7% in the year to December 2024 (Table 4), compared with a rise of 1.9% in the year to November (Table 4).

Prices for food products rose by 1.9% in the year to December 2024, compared with a rise of 1.8% in the year to November (Table 4).

Coke and refined petroleum products made the largest contribution to the change in the annual inflation rate in December 2024, with an upward contribution of 0.57 percentage points. Prices fell by 16.1% in the year to December 2024, up from a price fall of 22.4% in November. This was partly caused by a base effect, with monthly prices decreasing 7.1% in December 2023, compared with a monthly increase of 0.5% in December 2024.

The largest offsetting downward contribution to the annual inflation rate came from chemicals and pharmaceutical preparations, which contributed negative 1.13 percentage points. Prices rose by 0.4% in the year to December 2024.

Prices for services provided by UK companies, excluding financial and insurance services, rose 2.9% in the year to Quarter 4 (Oct to Dec) 2024, down from a revised increase of 3.7% in the year to Quarter 3 (July to Sept) (Figure 4). Quarterly output prices for services fell by 0.1% in Quarter 4 2024, down from a revised increase of 0.7% in Quarter 3 (Table 5).

Of the 9 product groups for the Services Producer Price Index (SPPI), 5 made upward contributions to the annual inflation rate in Quarter 4 2024. The largest of these came from accommodation and food services, and administrative and support services, at 3.19 and 1.98 percentage points, respectively (Figure 5).

Accommodation and food services had an annual price rise of 3.9% in the year to Quarter 4 2024, down from 5.0% in the year to Quarter 3 (Table 6).

Administrative and support services had an annual price rise of 4.2% in the year to Quarter 4 2024, down from 4.4% in Quarter 3 (Table 6).

Professional, scientific and technical services made the largest offsetting downward contribution to the annual inflation rate, at negative 1.74 percentage points. Prices rose by 2.1% in the year to Quarter 4 2024, down from a rise of 2.9% in the year to Quarter 3 (Table 6).

Transportation and storage services made the largest contribution to change in the annual inflation rate in Quarter 4 2024, at negative 0.26 percentage points. Prices for this service group rose 3.2% in Quarter 4 2024, down from a rise of 4.8% in Quarter 3 (Table 6).

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

As the aggregate producer prices indices are built up from individual product indices, it is possible to decompose overall inflation into contributions from different products. Those contributions reflect both the inflation rates for each product and their weight in the index. For more worked examples, see the scenarios in Section 8: Data sources and quality.

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 either imported or sourced from 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 output price (also known as the factory gate 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.

Producer prices development plan

The Office for Statistics Regulation's (OSR's) quality report of the Producer Price Indices (PPI) was published in 2023. The report notes the excellent progress made recently with bringing PPI in line with methodological best practice, but also highlights areas that need to be improved.

Our Producer prices development plan article was published in October 2023, detailing the work that will be undertaken to improve the quality of PPI data and continue to meet user needs.

The Producer Price Index

The 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 to the annual rate, as these tend to show greater change than the annual inflation rate:

• decrease in weight, decrease in inflation rate – contribution is negative

• decrease in weight, no change in inflation rate – contribution is negative

• decrease in weight, increase in inflation rate – contribution is usually negative

• no change in weight, decrease 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 (SPPI) QMI.

Other useful documentation from the Office for National Statistics (ONS) for the PPI and SPPI are:

• our Producer Price Indices methods changes article

• our Chain-linking in business prices article

• our Impact of methodological improvements on Producer Price Inflation article

• our Producer price weight changes article

• our Services producer price weight changes article

• our Guidance on using indices in Indexation Clauses (PDF, 197KB)

• our PPI methods and guidance (PDF, 1.18MB)

• our SPPI user guidance and methodology

• our PPI standard errors: 2017 datasets

• our UK SPPI standard errors: 2016 to 2017 article

Sterling effective exchange rate

The sterling effective exchange rate measures the level of sterling relative to a basket of other currencies. The weights in the basket reflect all UK trade and may therefore be different from those for manufactured goods, which are most relevant for producer prices.

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 revisions policy is now in line with that of the national accounts. We publish information about our revisions policy on our Revisions and corrections of errors webpage.

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 analysis, requiring some estimation

• the data can be revised for 12 months

• the data for the latest two months of the PPI and two quarters of the SPPI are provisional

Response rates in December 2024

In December 2024, the response rates for the domestic PPI, Import Price Index (IPI) and Export Price Index (EPI) were lower than they were in December 2023 (Table 7).

The response rate for the SPPI decreased between Quarter 4 (Oct to Dec) 2023 and Quarter 4 2024 (Table 8).

Accredited official statistics

These accredited official statistics were independently reviewed by the Office for Statistics Regulation in November 2010. They comply with the standards of trustworthiness, quality and value in the Code of Practice for Statistics and should be labelled "accredited official statistics".