Intermediate Infla Falls Sharply On Oil.....>

UK DATA: Intermediate Infla Falls Sharply On Previous Oil Price Decline

-UK Aug Input PPI -0.8% y/y vs +0.9% in July

-UK Aug Output PPI +1.6% y/y vs +1.9% in July

-UK Aug Core Output PPI +2.0% y/y, unchanged from July

-------------------------------------------------------------------------------------------------------

Pipeline inflation fell sharply, courtesy of an earlier retreat in oil 

prices, but sterling weakness could reverse those declines in months to 

come. Annual input PPI has not fallen by such a large margin since May 

2016, while the output measure recorded its joint-lowest rise since 

September 2016. Crude oil prices had declined by 11.6%, subtracting just 

over 2 percentage points from input PPI. However, the sterling effective 

exchange rate declined by 1.7% between July and August (the 5th 

consecutive monthly fall) and by an annual rate of 3.4%, leaving the 

rate at its lowest leve since October 2016. Weaker sterling and the 

recent push higher in oil prices could spell renewed inflation in the 

fourth quarter.