Producer prices were stronger than expected in September.
Factory gate charges were up 0.4 percent on the month, their steepest increase since May and firm enough to lift the annual inflation rate by 0.2 percentage points to 3.1 percent. This was the first pick-up in the yearly rate since June and fully reversed August's decline. On the month, the main boost came from petroleum products where prices jumped 1.6 percent (some 13.5 percent on the year) and food (monthly 0.7 percent). Metal, machinery and equipment (0.4 percent) also provide a boost but elsewhere changes were typically only small if not negative. As a result, the core index was only 0.1 percent higher than in August, although this still lifted the yearly underlying rate from 2.2 percent to 2.4 percent.
At the same time, raw material and fuel costs climbed a monthly 1.3 percent, their sharpest gain since May. Annual cost inflation jumped from an upwardly revised 9.4 percent to 10.3 percent to return to its level in June/July. Hefty monthly increases in crude oil (3.3 percent) alongside fuel (5.3 percent) and home food materials (2.3 percent) did most of the damage. However, there were partially offsetting falls in five of the nine subsectors.
The increase in pipeline price pressures shown in today's report will not be wasted on the BoE. However, as today's September CPI data show, for now at least consumer price inflation remains broadly under control.