Manufacturers' input costs and output prices rose again in October and by more than market expectations.
Factory gate prices were up 0.3 percent on the month which, following an unrevised 0.4 percent gain in September, lifted the annual inflation rate from 3.1 percent to 3.3 percent, matching the 2018 high seen in June. Amongst the major categories, the largest monthly increase was again in petroleum products (2.0 percent) which was well ahead of clothing, textiles and leather (0.9 percent). The only fall was in computer, electrical and optical products (0.4 percent). Core prices matched the 0.3 percent monthly headline gain which put the yearly underlying rate at 2.4 percent, in line with the September print.
Meantime, raw material and fuel costs climbed a further 0.8 percent versus September to stand 10.0 percent above their level a year ago. Inevitably, the main upward pressure stemmed from crude oil where charges were up fully 5.8 percent on the month. The only other gain was in imported food materials (just 0.2 percent) as all the other categories recorded declines.
Rising input costs continue eat away at corporate profitability as competitive markets effectively keep a lid of producers' ability to raise charges. As such, pipeline pressures from manufacturing on consumer prices still pose only a limited threat to the inflation target.