Output prices were just a little firmer than expected in March. Even then, a modest 0.2 percent monthly rise reduced the annual inflation rate from February's 2.6 percent to 2.4 percent, its lowest reading since October 2016. This was its also third successive decline.
Most basket components showed only limited monthly volatility. The main exceptions were tobacco and alcohol (1.1 percent) and petroleum products (minus 0.8 percent). Six of the ten reporting industries made negative contributions to the change in the annual rate and this was reflected in a minimal 0.1 percent monthly rise in the core index which, in turn, reduced the yearly underlying rate from 2.4 percent to 2.2 percent.
Meantime, raw material and fuel costs dipped 0.1 percent from mid-quarter to stand 4.2 higher on the year, up from 3.8 percent last time. This was the first increase in the 12-month rate since November. A 2.2 percent monthly fall in crude oil did most to keep costs in check although a seventh consecutive increase in the pound's trade weighted index also helped. Despite its acceleration, the yearly inflation rate is still some 14.6 percentage points below its level a year ago.
Taken together with a surprisingly soft March CPI (see today's calendar entry) the PPI update will add to creeping doubts about prospective BoE tightening next month.