Producer price inflation, UK: December 2022 including services, October to December 2022

1. Main points

  • Producer Price Index (PPI) weights for 2021 and 2022 have been corrected, which has resulted in a small number of revisions within the previously published data back to January 2021; there has been no change applied to SPPI weights, see Section 2 for more information.
  • Producer input prices rose by 16.5% in the year to December 2022, down from 18.0% in the year to November 2022, and down from 20.2% in the year to October 2022.
  • Producer output (factory gate) prices rose by 14.7% in the year to December 2022, down from 16.2% in the year to November 2022 and down from 17.5% in the year to October 2022.
  • Inputs of other parts and equipment, and petroleum products provided the largest downward contributions to the change in the annual rates of input and output inflation, respectively.
  • On a monthly basis, input prices decreased by 1.1% and output prices decreased by 0.8% in December 2022.
  • Services producer prices rose by 5.2% in the year to Quarter 4 (Oct to Dec) 2022, down from a record high of 6.2% in the year to Quarter 3 (July to Sept) 2022.

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2. Correction to producer price inflation (PPI) weights

As a result of the quality assurance preparing the PPI weights data for 2023, an error was identified in the 2022 weights whereby the price index for diesel fuel had not been correctly weighted within PPI for the whole of 2022. A Producer Price Index correction notice was published after the October release detailing the revisions made to PPI data for January to October 2022.

A further review was conducted of the data mapping systems used to align all data sources to the PPI. This identified additional, smaller errors in the PPI weights for both 2021 and 2022. As a result, the PPI was suspended to allow for a full investigation and quality assurance of the production process to take place. This quality assurance has now been completed and data source checks have been extended to ensure that all data is aligned correctly and fully audited at the time of use in calculating PPI weights. These additional steps to the production process will ensure that these errors are not repeated in other areas.

The errors identified in aligning the data sources to PPI for the purpose of calculating index weights affected five product groups within input and output PPI. These are listed below:

  • products of agriculture
  • printing and reproduction services
  • fabricated metal products
  • repair and installation services of machinery and equipment
  • other transport equipment

The change in weights resulting from these corrections has been minor and this is reflected in the scale of revisions to headline input and output PPI indices (Table 1). The scale of revisions is greater within input PPI because one affected category – products of agriculture – is not included in the output PPI. While revisions affected weights back to January 2021, the revisions to annual growth rates are less than 0.1 percentage point in many periods.

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