Indicator Digest - CMS Forex

Producer Prices

Main Indicator: Producer Price Index Input

Most Recent Release

September
8th, 2008

Actual

Forecast

Revised Form

-2.0%

-1.2%

-0.6%

N/A

For August (s.a)
Provided by: Office of National Statistics

PPI Input y/y: 26.0%, forecast 29.2%, pr. 30.1% (Jul), 30.8% (Jun)
PPI Output y/y: 9.7%, forecast 10.0%, pr. 10.2% (Jul), 10.8% (Jun)

UK producer prices fell further than expected in August, as the cost of materials and oil declined, and the economy slowed. Prices charged by factories (output prices) slipped 0.6%, the first decline since October 2006, and the biggest fall since the series began in 1986. Raw material costs (input prices) declined 2.0% on the month. On the year input prices are 26.0% higher than last year, though its a reduction from July's figure of 30.1%. The data will alleviate pressure on the BOE, which would like to help the economy by lowering rates, but remains concerned about inflation. Inflation accelerated to 4.4% in July. Last week, the Bank held rates steady at 5% for the 5th straight meeting.

From the Release: "Input price annual inflation fell from 29.3 per cent in July, to 26.0 per cent in August. Month on month, the input prices measure of UK manufacturers' materials and fuels fell 3.6 per cent. This mainly reflected a fall in the price of crude oil. In seasonally adjusted terms the index fell 2.0 per cent between July and August.

The 'narrow' input prices measure rose 16.4 per cent in the year to August. In seasonally adjusted terms the index rose 0.2 per cent between July and August."

The Pound rose against the Dollar in the wake of the weekend announcement that the Fed was going to take over Fannie Mae and Freddie Mac, but gave up its gains in a sharp 330 pip drop that was accentuated by the PPI result.

GBP/USD - After Strong Start to Week, Pound Tumbles 450 Pips: The Pound-Dollar pair rose over the weekend, and peaked overnight near 1.7950. From here the Pound tumbled more than 450 pips to set an intra-day low near 1.7470. That is a fresh two and half year low for the pair. The Pound's losses accelerated following the PPI release.
GBP/JPY - Pound Falls 600 Pips from IKntra-Day High: The Pound-Yen saw even more volatile action. The pair hit the 195.60 level overnight then proceeded to slide almost 600 pips to trade near Friday's close. The lower PPI data is consistent with outlooks that inflation has peaked, suggesting that the BoE may soon have the scope to cut rates.

Table of Past Data

	12/10	1/14	2/11	3/10	4/14	5/12	6/9	7/14	8/11	9/8

Actual	1.7%	0.5%	2.6%	1.7%	1.8%	2.4%	3.8%	2.1%	-0.6%	-2.0%
Forecast	1.4%	0.8%	1.0%	1.5%	1.8%	1.8%	2.6%	2.5%	1.0%	-1.2%
Previous	1.8%	2.0%	1.4%	2.6%	1.7%	1.8%	3.2%	3.9%	2.1%	-0.6%
Revised From	N/A	1.7%	0.5%	N/A	N/A	N/A	2.4%	3.8%	N/A	N/A

Secondary Indicator: Producer Price Index Output

Most Recent Release

September
8th, 2008

Actual

Forecast

Revised Form

-0.6%

0.0%

0.4%

N/A

For August (n.s.a)
Provided by Office of National Statistics (ONS)
Previous Release: PDF

PPI Output y/y: 9.7%, forecast 10.0%, pr. 10.3% (Jul), 10.0% (Jun)
PPI Output Core m/m: -0.1%, forecast 0.3%, pr. 0.3%
PPI Output Core y/y: 6.4%, forecast 6.6%, pr. 6.8%

See "Producer Price Index Input" for commentary.

From the Release: "Output price annual inflation for all manufactured products fell to 9.7 per cent in August. Input price annual inflation fell from 29.3 per cent in July, to 26.0 per cent in August. Month on month the output prices measure for all manufactured products fell 0.6 per cent in August, mainly reflecting falls in petroleum and other manufactured products.

The 'narrow' output prices measure, which leaves out volatile sectors, showed an annual increase of 6.4 per cent. The seasonally adjusted measure fell 0.1 per cent between July and August."

Table of Past Data

	12/10	1/14	2/11	3/10	4/14	5/12	6/9	7/14	8/11	9/8

Actual	0.5%	0.5%	1.0%	0.3%	0.9%	1.4%	1.6%	0.9%	0.4%	-0.6%
Forecast	0.3%	0.3%	0.4%	0.6%	0.5%	0.6%	0.8%	1.2%	0.5%	0.0%
Previous	0.6%	0.6%	0.4%	1.0%	0.5%	0.9%	1.5%	1.9%	0.9%	0.4%
Revised From	N/A	0.5%	0.5%	N/A	0.3%	N/A	1.4%	1.6%	N/A	N/A

Past Releases

Producer Price Index Input

August
11th, 2008

Actual

Forecast

Revised Form

-0.6%

1.0%

2.1%

N/A

For July (s.a)
Provided by: Office of National Statistics

PPI Input y/y: 30.1%, forecast 29.8%, pr. 30.8%(r+) (Jun), 28.7% (May)
PPI Output y/y: 10.2%, forecast 10.3%, pr. 10.0% (Jun), 9.3%(Apr)

Output prices rose 0.4% on the month, reflecting a rise in petro and chemical products. Core output prices rose 6.7% on the year, and 0.3% on the month. Although there was an easing of input prices in July, the annual pace of 30.1% is the highest on record. Core input prices rose 16.6% on the year and 0.4% on the month.

Producer Price Index Output

August
11th, 2008

Actual

Forecast

Revised Form

0.4%

0.5%

0.9%

N/A

For July (non-seasonally-adjusted)
Provided by Office of National Statistics (ONS)
Official Release: PDF

PPI Output y/y: 10.2%, forecast 10.3%, pr. 10.0% (Jun), 9.3%(Apr)

See "Producer Price Index Input" for more detail

Producer Price Index Input

July
14th, 2008

Actual

Forecast

Revised Form

2.1%

2.5%

3.9%

3.8%

For June
Provided by: Office of National Statistics

PPI Input y/y: 30.3%, forecast 29.0%, pr. 28.7%, 27.9%

See "Producer Price Index Input" for commentary

Producer Price Index Output

July
14th, 2008

Actual

Forecast

Revised Form

0.9%

1.2%

1.9%

1.6%

For June (non-seasonally-adjusted)
Provided by Office of National Statistics (ONS)

PPI Output y/y: 10.0%, forecast 9,7%, pr. 9.3%(r+)
PPI Input y/y s.a.: 30.3%, forecast 29.0%, pr. 28.7%(r+)

Though the monthly rate of inflation of factory prices were below expectations, the annual rate, at 10.0%, is the highest since 1986 when records began with the current methodology. Input prices in seasonally adjusted terms and on the year, also grew at record pace.

Manufacturers are passing on the surging petroleum and food costs. Petro products were up 34.2% on the year. These inflation figures highlight the challenge facing the central bank which faces record inflation in an environment of slowing growth. Prices at the gate have been elevated and accelerating since the end of last year and the wholesalers arel not be able to cushion the price shock for long. Eventually the consumers feel the rising cost spelling a downward pressure on demand as their expectation of inflation increases as well.

Producer Price Index Input

June
9th, 2008

Actual

Forecast

Revised Form

3.8%

2.6%

3.2%

2.4%

For May
Provided by: Office of National Statistics

PPI Input y/y s.a. 27.9%, forecast 23.8%, pr. 24.3%
PPI Output y/y s.a. 8.9%, forecast 7.9%, pr. 7.6%

As feared by the BoE, inflation is still on the rise. At the factory gates, input prices soared to 27.9% on an annual basis in May, and output prices climbed 8.9% annually. Both rates are record highs in this series, which began in 1986. The faster than expected rise in factory gate inflation will dampen business sentiments, and indicate future retail prices rising and choking off consumer spending. The release boosted the Sterling against the Euro. The two respective central banks are seeing similarly threatening inflation levels, and will have to take any plans for a rate cut off the table.

Producer Price Index Output

June
9th, 2008

Actual

Forecast

Revised Form

1.6%

0.8%

1.5%

1.4%

For May
Provided by: Office of National Statistics

PPI Output y/y: 8.9%, forecast 7.9%, pr. 7.6% R
PPI Output Core m/m: 1.2%, forecast 0.4%, pr. 1.2% R
PPI Output Core y/y: 5.9%, forecast 4.8%, pr. 4.6%

See "Producer Price Index Input" for commentary

Producer Price Index Input

May
12th, 2008

Actual

Forecast

Revised Form

2.4%

1.8%

N/A

For April (seasonally adjusted m/m)
Provided by: Office of National Statistics

PPI Input y/y: 23.3%, forecast 21.4%, pr. 20.6% (Mar), 19.7% (Feb)

Producer prices in the UK showed no signs of easing up, as prices climbed to the fastest annual pace since at least 1986. Prices charged by factories (PPI Output) rose 7.5% on the year and 1.4% on the month, both the highest totals since records began being kept. Core prices were up 4.6% on the year.

Raw material costs (PPI Input) rose 2.4% on the month and 23.3% on the year. It's the biggest annual gain on record. Oil prices reached $126.27 per barrel last week, and will continue to have to be absorbed by the UK economy. CPI data comes out overnight on Monday, and is expected to show an increase to 2.6% for March in annual terms.

The Pound strengthened following the report, as it may cause the Bank of England to phase in rate cuts at an even more gradual pace than they are currently set to do.

Producer Price Index Output

May
12th, 2008

Actual

Forecast

Revised Form

1.4%

0.6%

0.9%

N/A

For April (seasonally adjusted m/m)
Provided by: Office of National Statistics

PPI Output: 7.5%, forecast 6.4%, pr. 6.2% (Mar), 5.9% (Feb)
PPI Output Core m/m: 1.0%, forecast 0.3%, pr. 0.3%
PPI Output Core y/y: 4.6%, forecast 3.2%, pr. 3.1%

The Pound strengthened following the report, as it may cause the Bank of England to phase in rate cuts at an even more gradual pace than they are currently set to do.

Producer Price Index Input

April
14th, 2008

Actual

Forecast

Revised Form

1.8%

1.7%

N/A

For March (seasonally adjusted m/m)
Provided by: Office of National Statistics

PPI Input y/y: 20.6%; forecast: 19.3%; pr. 19.7%

March's annual rate for input prices surged to the highest level since 1986, as UK producers continue to pay higher fuel costs. Annual output prices rose 6.2%, the highest since 1991. Inflation at shops has been manageable, but will present a problem to the BoE, which cut rates by 25bps last week. As costs increase, profit margins will shrink companies will feel the pinch. Passing along the cost increases will make prices volatile and even harder to deal with for the bank.

From the release:

"Month on month, the output prices measure for all manufactured products rose 0.9 per cent in March, mainly reflecting rises in petroleum product prices. If passed on in full, the changes in excise duty on tobacco and alcohol announced in the Budget would have increased the index by 0.3 per cent in March.

Month on month, the input prices measure of UK manufacturers’ materials and fuels rose 2.9 per cent. This mainly reflected a rise in the price of crude oil. In seasonally adjusted terms the index rose 1.8 per cent between February and March."

Producer Price Index Output

April
14th, 2008

Actual

Forecast

Revised Form

0.9%

0.5%

0.3%

For March (seasonally adjusted m/m)
Provided by: Office of National Statistics

PPI Output: 6.2%; forecast: 5.6% pr. 5.9%

From the release:

"Month on month, the output prices measure for all manufactured products rose 0.9 per cent in March, mainly reflecting rises in petroleum product prices. If passed on in full, the changes in excise duty on tobacco and alcohol announced in the Budget would have increased the index by 0.3 per cent in March.

Month on month, the input prices measure of UK manufacturers’ materials and fuels rose 2.9 per cent. This mainly reflected a rise in the price of crude oil. In seasonally adjusted terms the index rose 1.8 per cent between February and March."

Producer Price Index Input

March
10th, 2008

Actual

Forecast

Revised Form

1.7%

1.5%

2.6%

N/A

Seasonally adjusted month-over-month for February
Press Release from Office of National Statistics

Producer Price Index Output

March
10th, 2008

Actual

Forecast

Revised Form

0.3%

0.6%

1.0%

N/A

Seasonally adjusted month-over-month for February
Press Release from Office of National Statistics

Producer Price Index Input

February
11th, 2008

Actual

Forecast

Revised Form

2.6%

1.0%

1.4%

0.5%

Seasonally adjusted month-over-month for January
Press Release from Office of National Statistics

PPI Input y/y: 19.1%, forecast 14.4%, pr. 12.2% (Dec-r), 10.9% (Nov)

UK input prices, a measure of the cost of raw materials, jumped to an annual pace of 19.1%. This annual pace was a record and will give the centrla bank pause before it continues its campaign of lowering interest rates. The UK output price index rose an annual 5.7%.

"Month on month, the input prices measure of UK manufacturers’ materials and fuels rose 2.9 per cent. This mainly reflected rises in the prices of crude oil. In seasonally adjusted terms the index rose 2.6 per cent between December and January.

The 'narrow' input prices measure rose 7.3 per cent in the year to January. In seasonally adjusted terms the index rose 2.3 per cent between December and January."

Producer Price Index Output

February
11th, 2008

Actual

Forecast

Revised Form

1.0%

0.4%

0.5%

For January
Press Release from Office of National Statistics

PPI Output y/y: 5.7%, forecast 5.1%, pr. 5.0%
PPI Core m/m: 0.8%, forecast 0.3%, pr. 0.4%
PPI Core y/y: 3.1%, forecast 2.6%, pr. 2.5%

Producer prices for goods rose 5.7% annualy, higher than expectations. The price of raw materials (PPI Input) increased an annual 19.1%. Prices were pushed up by high food prices (an annual increase of 8.5%) and continued high crude oil prices. The high pace of producer inflation caused the Pound to rise, as investors lowered expecatations of further rate cuts by the Bank of England. It has lowered rates the last 2 out of 3 sessions in a bid to help growth, but has mentioned that is concerned about inflation.

Producer Price Index Input

January
14th, 2008

Actual

Forecast

Revised Form

0.5%

0.8%

2.0%

1.7%

Seasonally adjusted month-over-month for December.
Press Release from Office of National Statistics

PPI Input y/y: 11.3%, forecast 10.6%, pr. 10.9% (Nov).

Inflation for inputs to producers was lower on a seasonally adjusted monthly basis than expected in today's report on factory gate inflation. Output prices increased more than expected.

Producer Price Index Output

January
14th, 2008

Actual

Forecast

Revised Form

0.5%

0.3%

0.6%

0.5%

For December.
Press Release from Office of National Statistics

PPI Output y/y: 5.0%, forecast 4.7%, pr. 4.5%

Output prices increased 0.5% on the month, and 5.0% annually, reflecting rises in petrol and food products. The "narrow" output rpices, which leave outs the volatile food and energy sectors, showed an annual increase of 2.5%, and 0.4% month-over-month. Input prices increased 1.0% on the month, and 11.3% on the year.

Producer Price Index Input

December
10th, 2007

Actual

Forecast

Revised Form

1.7%

1.4%

1.8%

N/A

For November.
See Release from UK Office of Statistics

Producer Price Index Output

December
10th, 2007

Actual

Forecast

Revised Form

0.5%

0.3%

0.6%

N/A

For November.

Provided by UK Office of Statistics