Producer price inflation, UK: April 2021

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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Cyswllt:
Email Emelia D'Silva-Parker

Dyddiad y datganiad:
19 May 2021

Cyhoeddiad nesaf:
16 June 2021

1. Main points

  • The headline rate of output prices showed positive growth of 3.9% on the year to April 2021, up from positive growth of 2.3% in March 2021.

  • The headline rate of input prices showed positive growth of 9.9% on the year to April 2021, up from positive growth of 6.4% in March 2021, this is the highest the rate has been since February 2017.

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

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2. Analysis

On the month, the rate of output inflation slowed to 0.4% in April 2021, down from 0.8% in March 2021(Table 1).

Transport Equipment provided the largest upward contribution of 1.82 percentage points to the annual rate (Figure 2) and had a positive annual price growth of 0.4% in April 2021 (Table 2).

The upward contribution is mainly driven by weight changes in 2021. A 15.6% increase in weight for this category coupled with an increase in the annual growth rate has resulted in a large upward contribution to the headline rate.

The annual rate of output inflation increased by 1.6 percentage points from 2.3% last month to 3.9% this month. Petroleum products had the highest annual growth rate of any component of output prices in April 2021, at 50.3% (Table 2). This was entirely driven by a base effect as there was no price movement on the month. In April 2020, prices for petroleum products fell by 23.5% as there was significant fall in demand in the market. More recently, prices have stabilised, and annual growth rates are higher than in recent months as they are now being compared with the exceptionally low prices at the beginning of the pandemic.

On the month, the rate of input inflation slowed to 1.2% in April 2021, down from 1.9% in March 2021 (Table 3).

The annual rate of imported inputs was 5.6% in April 2021 (Table 4), up from 0.8% in March 2021.

The largest upward contribution to the annual input inflation rate came from metals and non-metallic minerals, which contributed 4.23 percentage points (Figure 4) and had positive annual price growth of 18.2% in April 2021 (Table 5).

The annual input inflation rate increased by 3.5 percentage points from 6.4% last month to 9.9% this month. Crude oil had the highest annual growth rate of any component of input prices in April 2021, at 121.2% (Table 5). This was driven by a base effect as prices fell 2.2% on the month but fell by 32.4% between the same months last year. For further information regarding base effect and crude oil, please see Section 4. Producer price inflation - input analysis of the March 2021 Producer Price Index (PPI) bulletin.

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3. Producer price inflation data

Producer price inflation time series
Dataset | Released 19 May 2021
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 19 May 2021
Contributions to the 12-month rates of input and output producer price inflation by component and overall rates.

Producer price inflation
Dataset MM22 | Released 19 May 2021
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

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

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:

Input prices

Since moving to gross sector series, there had been a gap in the historical input price series between periods January 1996 and November 2008. The input series have now been compiled using component indices from the Supply Use Tables and Prodcom sales from 2005. This is done using the data that were best available for the periods in concern and has been through rigorous testing of methods prior to implementation. This series displays the best estimate of the UK’s input PPI for periods prior to November 2011.

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 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 Office for National Statistics 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.

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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 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 April 2021

Response rates for the domestic (PPI) show an increase between March 2021 and April 2021, whereas the response rates for the export (Export Price Index ) and import (Import Price Index ) show a decrease between March 2021 and April 2021 (Table 6).

Effective response rates exclude items permanently not available for collection.

Links to additional ONS sources of coronavirus information

Various articles have been published that help describe the ONS response to how the coronavirus might be seen in our estimates:

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

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

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Emelia D'Silva-Parker
business.prices@ons.gov.uk
Ffôn: +44 (0)1633 456907