Producer prices continued to climb in June but by less than expected.
Factory gate prices were up just 0.1 percent on the month, albeit after a larger revised 0.5 percent increase in May. This put their yearly rate at 3.1 percent, only a tick higher than in mid-quarter but still the strongest reading since September 2017. Within the basket, most prices saw little monthly volatility bar petroleum and transport which posted gains of a 0.7 percent and 0.5 percent respectively. The core index rose 0.2 percent versus May which left its annual rate flat at 2.1 percent.
Meantime, input prices followed an upwardly revised 3.3 percent monthly spike in May with a modest 0.2 percent rise. Even so, this was enough to lift their yearly change from 9.6 percent to 10.2 percent, implying an additional squeeze of business profit margins.
Combined with the surprisingly soft June CPI (see today's calendar entry), the PPI update provides further reason for supposing that the UK inflation backdrop might not be deteriorating as quickly as the BoE anticipated. A monetary tightening next month clearly remains a possibility but arguing the case has certainly got rather harder.