January 25, 2023 07:46 GMT
Initial Core PPI Easing Evident
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UK PPI OUTPUT DEC -0.8% M/M (FCST +0.1%), +14.7% Y/Y; NOV +16.2% Y/Y
UK PPI INPUT DEC -1.1% M/M (FCST -0.8%); +16.5% Y/Y; NOV +18.0% Y/Y
- Annualised input PPI slowed for a fifth (sixth) consecutive month in December to +16.5% y/y (output +16.5% y/y), 8.1pp below the June record high. The UK December PPI data release also included revisions, whereby rates were largely upgraded by +0.1 to +0.2pp in H2 due to reweighting corrections.
- PPI contracted by -0.8% m/m (output) and -1.1% m/m (input), the largest m/m falls since April 2020 -- the first full month post lockdowns).
- Downwards pressure came largely from crude oil, and to a lesser extent from other parts/equipment and metals. Easing supply bottlenecks alongside weakening demand is supporting slowing factory-gate inflation.
- Despite core output PPI up by +0.1% m/m, core input PPI fell by -0.4% m/m. This was the first contraction in m/m input PPI since the lockdown of April 2020. The focus will be on whether this translates into falling output PPI, which should feed into easing core CPI which had proven to be very sticky between +6.3% to +6.5% y/y since August.
- Around 45bp remain priced in for next Thursday's BOE meet.
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