–Dec producer output prices +0.5% m/m; +4.2% y/y
–Dec core producer output prices +0.2% m/m; +2.9% y/y
–Dec producer input prices +3.4% m/m; +12.5% y/y

LONDON (MNI) – Input prices leapt during the month of December,
pushed higher by the increased cost of crude oil and food, figures
released by National Statistics showed Friday.

Input prices increased by 3.4% on the month and were up 12.5% on
the year, the largest rises since March and April respectively. The
outturn on the month was more than double the median forecast of 1.5%
and higher than the year-on-year forecast of 10.2%.

The figures will add to both the Bank of England’s and economists’
growing concerns over inflationary pressures in the economy.

Input prices were driven higher by an 8.1% monthly increase in the
price of crude oil which now stands 26.2% above levels a year earlier.

There was also upward pressure from fuel prices which increased by
4.5% on the month and by 3.8% on the year, the highest annual rise since
May 2009. The monthly increase was driven by a 12.7% monthly increase in
the price of gas.

Home produced food prices rose 3.4% between November and December
and were up 11.3% on the year, the highest annual growth since October
2008. Sharp price rises were seen in home produced vegetables and
cereals.

Further down the supply chain headline output prices also rose by
more than economists expected.

Output prices rose 0.5% on the month in December and increased by
4.2% in the year, up from 4.1% in November. The outturn was slightly
higher than the median forecast for a rise of 0.4% on the month and an
increase of 4% on the year.

Petroleum product prices rose 2.4% on the month in December and
were up 12.6% on the year. Food product prices increased 1.1% between
November and December and by 3.3% on the year, the highest annual rise
since June 2008.

Governor of the Bank of England, Mervyn King, has said that the
rise in inflation is temporary with much of the increase out of the
control of monetary policy.

Figures on core output price inflation, which strips out erratic
items, supports this view somewhat with inflation falling this month.

Core output prices which exclude food, tobacco, alcohol and petrol
were up 0.2% on the month and 2.9% on the year, down from 3.3% in
November. The outturn was below the median forecast for a rise of 0.3%
on the month and 3% on the year.

–London newsroom 4420 7862 7491 email: drobinson@marketnews.com

[TOPICS: MABDA$,M$B$$$,MT$$$$,MABDS$]