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Output prices see fastest fall

10:58am Friday 10th July 2009

Factory gate prices fell at their fastest annual rate in almost eight years Factory gate prices fell at their fastest annual rate in almost eight years

Factory gate prices fell at their fastest annual rate in almost eight years

Factory gate prices fell at their fastest annual rate in almost eight years




Factory gate prices fell at their fastest annual rate in almost eight years during June due to lower oil prices, official figures have revealed.

Output prices are now 1.2% lower than a year ago - the biggest year-on-year fall since December 2001, the Office for National Statistics (ONS) said.

Despite petrol prices creeping up in recent weeks, oil is now at less than half the record 147 dollars a barrel seen last July as recession bears down on demand.

Petrol prices have fallen 20% year on year, the biggest decline since ONS records began in 1992.

Factory gate prices dropped 0.2% between May and June after a record 3% fall in chemical prices and lower costs for manufactured products and scrap metal offset a 4% rise in petrol prices.

Howard Archer, of IHS Global Insight, said: "Producer output prices were far weaker than expected, indicating that manufacturers remain under intense pressure to price competitively."

Output prices slipped between May and June, but input costs rose 1.5%.

This was because crude oil costs rose at their fastest monthly rate in almost five years, despite overall prices being well below a year earlier.

Year-on-year input costs are 11% below June last year, the biggest annual fall since 1997.

But so-called "core" output prices, which exclude volatile commodities such as food and petrol, also fell 0.8% over the month and are just 0.1% higher than a year earlier - the weakest annual increase in five years.


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