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U.K. March Output Price Inflation At 2-Year Low


U.K. factory gate inflation declined to the lowest level in more than two years in March. Nonetheless, higher oil prices lower the prospects of a further slowdown in the coming months.

Output price inflation slowed to 3.6 percent annually in March, the smallest since January 2010, from 4.1 percent in February, a report released by the Office for National Statistics showed Friday. The rate stayed slightly above the 3.5 percent rise forecast by economists.

The output price index for home sales of manufactured products rose 0.6 percent, the same rate of increase as seen in February. The increase exceeded economists' forecast of a 0.5 percent rise.

The monthly rise in the output index mainly reflected price increases in petroleum products, tobacco and alcohol products and other manufactured products. Petroleum product prices showed a 2.4 percent rise for March.

The month-on-month increase in output prices highlights the ongoing risk that high oil prices will prevent consumer price inflation from falling back as quickly or as far as had been hoped for, IHS Global Insight's Chief UK Economist Howard Archer said.

Excluding food, beverages, tobacco and petroleum, the annual core output price inflation fell to 2.5 percent from 3 percent in February. Likewise, the monthly rate dipped to 0.1 percent from 0.5 percent.

Overall input price inflation also eased to 5.8 percent in March from 7.8 percent in the prior month. However, the rate was bigger than the expected 4.8 percent.

On a monthly basis, input prices gained 1.9 percent, slower than than the 2.5 percent increase logged in February.

by RTTNews Staff Writer

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