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UK's PPI continues to dip in May 2023: ONS

22 Jun '23

3 min read

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Insights

UK's producer price index (PPI) showed major slowdown in May 2023, with input annual rate 23.9 per cent below June 2022's high, as per the Office for National Statistics (ONS).
Output PPI also dropped, marking a slowdown trend.
May 2023 saw record dips in the country's inflation rates, with crude oil and petroleum products driving most decline.

The UK's producer price index (PPI)—both input and output—has seen significant changes over the last several months, with the annual rates witnessing a considerable slowdown, according to the Office for National Statistics (ONS). The annual rate of the input PPI has been positive for 30 consecutive months, a consistent streak despite decelerating for the past 11 months. In May 2023, it stood at 23.9 percentage points below its record annual high of 24.4 per cent in June 2022.

In a similar trend, the output PPI has been positive for 29 months, slowing for the past 10. It saw a drop of 16.7 percentage points from its recent high of 19.6 per cent in July 2022.

The index levels for both input and output prices remained largely unchanged since June 2022. This follows a period of rapid increase from 2021 into early 2022, as per ONS.

The annual inflation rate of producer input prices also saw a dip by 3.7 percentage points from 4.2 per cent in April 2023 to 0.5 per cent in May 2023, the lowest annual rate since November 2020.

The monthly producer input inflation in May 2023 fell by 1.5 per cent, a notable shift from the 0.1 per cent increase seen in April 2023. This is the largest monthly decrease since April 2020, significantly down from the record monthly increase of 5.1 per cent in April 2022—an immediate result of the Ukraine conflict and its impact on crude oil prices.

Among the 10 product groups analysed, 9 showed a decline in contributions to the change in the annual inflation rate. Crude oil emerged as the most significant contributor, contributing 1.49 percentage points to the decline.

Furthermore, the annual inflation rate of producer output prices, commonly referred to as 'factory gate' prices, decreased by 2.3 percentage points from 5.2 per cent in April 2023 to 2.9 per cent in May 2023. This is the lowest annual rate since March 2021.

The monthly producer output inflation also fell by 0.5 per cent in May 2023, compared to a 0.2 per cent decrease in April 2023.

Of the 10 product groups analysed in this category, 9 showed downward contributions to the change in the annual inflation rate, with petroleum products providing the largest contribution, at 0.56 percentage points. In terms of monthly changes, petroleum product prices dropped by 4.8 per cent in May 2023, a stark contrast to the 3.0 per cent increase in May 2022. Clothing, textile, and leather products, however, saw a monthly price increase of 0.7 per cent.

Fibre2Fashion News Desk (DP)

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