Producer prices rose a sizeable and larger than expected 0.7 percent on the month in January equalling the sharpest increase since April 2011. As a result, annual PPI inflation climbed fully 1.4 percentage points to 2.4 percent, its highest mark since March 2012.
Energy charges were only partly to blame, posting a 1.1 percent gain versus December and a 4.0 percent yearly rate, up from just 0.2 percent last time. Excluding this sector, the PPI still increased 0.6 percent to lift the annual underlying inflation rate from 1.2 percent to 1.8 percent. Consumer goods were up only 0.3 percent on the month but basics rose 0.9 percent and capital goods 0.4 percent.
The headline PPI has now risen for four consecutive months to put prices at their highest level since July 2015. With business surveys continuing to indicate building pressures on capacity and skills shortages in some industries, manufacturing looks likely to provide consumer prices with a significant boost in 2017.