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Economy in Brief

UK Producer Prices Showing Steady Accelerating Rise From Lows
by Robert Brusca September 11, 2009

Manufacturing prices in the UK rose by 0.5% in August as core prices rose by 0.4%. Over 12- to 6- to 3-months annualized rates of MFG prices are accelerating. But over the same periods Core MFG prices look more as if they are decelerating.

The chart shows the clear upward path of overall price inflation in the UK. It certainly has a lot to do with the ongoing rebound in global oil prices. Yet, Yr/Yr overall MFG prices are still falling. And Yr/Yr core prices are up by just 0.7%. While the charts dramatize the turnaround in inflation trends don’t forget to look at the scales. Inflation is rising from deeply negative numbers to modest rates of increase even when compounded over short periods. Yr-over-year headline inflation is still lower. The modest core further cements the notion of inflation being controlled. For now the pressure is mostly due to oil prices and the pace of price recovery should not be taken out of its proper context.

UK PPI MFG net output prices
  %m/m %-SAAR
  Aug-09 Jul-09 Jun-09 3-mo 6-mo 12-mo 12-moY-Ago
MFG 0.5% 0.2% 0.1% 3.2% 2.1% -0.4% 9.2%
Core 0.4% 0.4% -0.6% 0.4% 1.1% 0.7% 5.7%
Core: ex food beverages, tobacco & Petroleum
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