-Jun Producer Output Prices -0.4% m/m; 2.3% y/y
-Jun Core Producer Output Prices -0.2% m/m; 2% y/y
-Jun Input Prices -2.2% m/m; -2.3% y/y

LONDON (MNI) – Output price inflation fell to its lowest level for
two and half years in June, as petrol prices continued to decline,
figures released by National Statistics showed Friday.

The data revealed a further welcome fall in pipeline price
pressures, and a sharp fall in input prices also suggests further drops
to come. This slowdown in producer price inflation boosts the likelihood
that inflation at the consumer level will ease further over the coming
month, as the Bank of England forecast in its latest Inflation Report.

Producer output prices fell 0.4% on the month and were up 2.3% on
the year, below the median forecast for a monthly decline of 0.2% and
annual rise of 2.4%. The fall between May and June was the sharpest
since November 2008 and the annual rate now stands at its lowest since
October 2009.

The main reason behind the monthly drop was a fall in petrol prices
during the month and also declines in chemical and pharmaceutical and
clothing, textile and leather products.

Core output prices which exclude the effects of changes in food,
beverages, tobacco and petroleum were down 0.2% on the month causing
inflation to ease to 2% from 2.3% previously, the lowest since January
2010.

The softness in output prices looks set to continue as input prices
in June fell 2.2% on the month in June leaving them down 2.3% below
levels a year earlier, the lowest level since September 2009. The latest
monthly drop was mainly due to a 9.1% fall in crude oil between May and
June, the largest monthly decline since December 2008.

Imported metal prices were down 1.4% on the month and by 10% on the
year in June.

Excluding the impact of food, beverages, tobacco and petroleum
input prices fell 0.1% on the month and by the same amount on the year
on a seasonally adjusted basis, the lowest annual rate since September
2009.

–London bureau: 0044 20 7862 7491; email: puglow@marketnews.com

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