Output price inflation in the U.K. slowed in July to the lowest since October 2009, signaling further easing of inflationary pressures in the economy, the latest figures from the Office for National Statistics showed Friday.
Factory-gate inflation eased to 1.7 percent in July from a revised 2 percent in June. The last time the annual rate was lower was in October 2009, when the index rose 1.5 percent, according to the statistical office.
Economists had forecast the rate of inflation to ease to 2 percent from June's originally estimated 2.3 percent. Output price inflation has decelerated steadily since September 2011.
"Indeed, the further fall in output price inflation suggests that consumer price inflation is still on course for a very low rate," Capital Economics economist Samuel Tombs said.
On a monthly basis, output pries remained flat in line with expectations. This compares to a fall of 0.6 percent between May and June.
Core output price index that excludes food, beverages, tobacco and petroleum, rose 1.3 percent year-on-year. This is the lowest annual rate since September 2009, when the index also rose 1.3 per cent. The last time the annual rate was lower was in January 2007. Month-on-month, the core measure remained unchanged.
Annually, input prices fell 2.4 percent compared to expectations for a 1.5 percent fall. Month-on-month, the index rose 1.3 percent as expected, marking the first increase in four months.
Separately, the statistical office reported that the construction output declined 3.9 percent quarter-on-quarter in the second quarter, which smaller than the 5.2 percent fall estimated previously.
According to the statistical office, the estimated impact on the second quarter GDP from this release of construction output data is an upwards revision of 0.1 percentage points. Preliminary estimates showed that GDP fell 0.7 percent sequentially in the second quarter.
Data released earlier this week showed industrial production falling 0.9 percent sequentially in the second quarter. This suggested an upward revision to the GDP of approximately 0.07 percentage points.
"The hope is that if the hit to both industrial production and construction activity from the extra day's public holiday in the second quarter was over-estimated by the ONS, there may also be an upward revision to services activity, which was reported to have contracted by 0.1% quarter-on-quarter," IHS Global Insight economist Howard Archer said.
"The fact is that the construction sector is currently hampered by major headwinds, notably including public spending cuts, a weak economy, a struggling housing sector, and problems in getting funding for large-scale projects."
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Forex News
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.