Producer price inflation, UK: June 2021 including services, April to June 2021

• The headline rate of output prices showed positive growth of 4.3% on the year to June 2021, down from 4.4% in May 2021.

• The headline rate of input prices showed positive growth of 9.1% on the year to June 2021, down from 10.4% in May 2021.

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

• The annual rate of growth for the Services Producer Price Index (SPPI) showed positive growth of 2.0% in Quarter 2 (Apr to Jun) 2021, up from 1.3% in Quarter 1 (Jan to Mar) 2021.

• Professional, scientific and technical services provided the largest upward contribution to the annual rate.

On the month, the rate of output inflation was 0.4% in June 2021, down from 0.8% in May 2021 (Table 1).

Transport equipment provided the largest upward contribution of 1.41 percentage points to the annual rate (Figure 2) but had negative annual price growth of 2.6% in June 2021 (Table 2).

Despite showing negative annual growth, transport equipment provided an upward contribution to the annual rate. This is because of the weight changes implemented as part of the move to annual chain-linking. The weight for transport equipment has increased by 15.6% between 2020 and 2021.

The annual rate of output inflation decreased by 0.1 percentage points from 4.4% in May 2021 to 4.3% in June 2021; this is the first time the annual rate of output inflation has slowed since May 2020.

Petroleum products had the highest annual growth rate of any component of output prices in June 2021, at 52.3% (Table 2), but had the largest downward contribution to the change in the annual rate, at 0.32 percentage points, as it fell from 68.4% in May. In June 2020 prices rose by 14.6% on the month (compared with a rise of 3.6% in June 2021), as demand started to pick up and the Organization of the Petroleum Exporting Countries (OPEC) extended supply cuts, but prices remained relatively low with annual growth of negative 35.4% in June 2020. The rate for petroleum products in June 2021 reflects both current month changes and base effects as global demand continues to increase. Demand may have risen because of the COVID-19 vaccination uptake, which has facilitated a relaxation of lockdown restrictions.

On the month, the rate of input inflation was negative 0.1% in June 2021, down from 1.2% in May 2021 (Table 3).

The annual rate of imported inputs was 3.7% in June 2021 (Table 4), down from 4.8% in May 2021.

The largest upward contribution to the annual input inflation rate came from metals and non-metallic minerals, which contributed 3.98 percentage points (Figure 4) and had positive annual price growth of 16.9% in June 2021 (Table 5).

The annual input inflation rate decreased by 1.3 percentage points from 10.4% in May 2021 to 9.1% in June 2021; this is the first time the annual rate of input inflation has slowed since August 2020.

Crude oil had the highest annual growth rate of any component of input prices in June 2021, at 54.4% (Table 5), but had the largest downward contribution to the change in the annual rate, at 0.86 percentage points, as it fell from 107.3% in May. These annual growth rates reflect a base effect; in June 2020 we saw crude oil increase by 39.5% on the month as demand started to pick up when pandemic restrictions were eased. This compared with monthly growth of 3.9% in June 2021.

The quarter-on-quarter growth of services sold by UK companies was 0.9 in Quarter 2 2021, down from 1.0 in Quarter 1 2021 (Table 6).

The largest upward contribution to the annual rate was professional, scientific and technical services, with an annual price increase of 3.1% (Table 7).

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.

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

Other useful documentation for the Producer Price Index (PPI) and the Services Producer Price Index (SPPI) are:

• Producer price indices methods changes

• Chain-linking in business prices

• Producer price weight changes

• Services producer price weight changes

• Guidance on using indices in indexation clauses

• PPI methods and guidance

• SPPI user guidance and methodology article

• PPI standard errors article and SPPI standard errors article

Sterling effective exchange rate

The sterling effective exchange rate measures changes in the strength of sterling relative to the 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 transaction in the manufacture sector.

End of EU exit transition period 

As the UK enters into a new Trade and Co-operation Agreement with the EU, the UK statistical system will continue to produce and publish our wide range of economic and social statistics and analysis. We are committed to continued alignment with the highest international statistical standards, enabling comparability both over time and internationally, and ensuring the general public, statistical users and decision-makers have the data they need to be informed.

As the shape of the UK's future statistical relationship with the EU becomes clearer over the coming period, the ONS is making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK's well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available later this year.

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 is very 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 in June 2021

Response rates for the domestic Producer Price Index (PPI) and Export Price Index (EPI) show an increase between May 2021 and June 2021, whereas the response rates for the Import Price Index (IPI) show a decrease between May 2021 and June 2021 (Table 8).

Links to additional sources of coronavirus information from the Office for National Statistics (ONS)

Various articles have been published that help describe the Office for National Statistics' (ONS) response to how coronavirus might be seen in our estimates:

• Coronavirus and the effects on UK prices (published 6 May 2020)

• Coronavirus and the impact on output in the UK economy, UK: March 2021 (published 12 May 2021)

• Meeting the challenge of measuring the economy through the COVID-19 pandemic (published 6 May 2020)

• Coronavirus and the effects on UK GDP (published 6 May 2020)

• Real-time turning point indicators: a UK focus (published 27 April 2020)

• Communicating gross domestic product (published 27 April 2020)

Our latest data and analysis on the impact of coronavirus on the UK economy and population are also available.

The ONS has released a public statement on coronavirus and the production of statistics. Any specific queries can be directed to the Media Relations Office.