Producer prices moved much as expected in August.
Factory gate prices were up a monthly 0.2 percent, their fifth increase in the last six months, but a small enough gain to lower the yearly inflation rate by a couple of ticks to 2.9 percent. This was the second successive dip in the annual rate and a 4-month low. Outside of petroleum products, (0.8 percent) and chemicals (0.6 percent), monthly changes in component prices were quite subdued and there were falls in clothing and textiles (0.3 percent) and paper and printing (also 0.3 percent). The core index was just 0.1 percent higher than in July which left it 2.1 percent above its level in August 2017 after a 2.3 percent annual rate last time.
At the same time, input costs climbed 0.5 percent on the month for an 8.7 percent monthly increase, down sharply from 10.3 percent last time. Both rates would have been lower but for the impact of more costly imports as sterling's trade weighted index fell 1 percent over the period. Domestic costs were either flat or declined.
Today's update suggests still limited pipeline inflation pressures in manufacturing. However, these would be more marked but for companies' willingness to accept an ongoing squeeze on margins. This cannot last indefinitely.