Factory gate prices rose a 0.3 percent on the month in April, in line with market expectations. The annual inflation rate was 2.7 percent, unchanged from March's upwardly revised mark and so still 0.8 percentage points below December's recent peak.
The main positive contribution to the monthly change in the yearly rate came from petroleum products where prices were up 1.7 percent. Chemicals and pharmaceuticals (0.5 percent) also provided a lift. There were no declines amongst the main categories but the core index was just 0.1 percent firmer on the month. This put the annual underlying rate at 2.4 percent, down from 2.7 percent and a 5-month low.
Meantime, raw material and fuel costs rose a monthly 0.4 percent for a 5.3 percent yearly rate, up from 4.4 percent last time and their second consecutive increase but still well short of the 15.3 percent mark posted in April 2017. Costs were boosted by a 4.8 percent spurt in crude oil and would have increased more steeply but for another rise in the pound's trade weighted exchange rate (1.4 percent). Apart from home food materials (0.9 percent), this was the only monthly advance of any significance and most other categories recorded small declines.
Combined with a softer than expected April CPI (see today's calendar entry), today's pipeline inflation update should sit reasonably well with the BoE and help to keep Bank Rate at 0.5 percent for some time yet.