U.K. factory output prices unexpectedly fell in December for the first time in 18 months as the cost of petroleum products such as gasoline plunged.
The cost of goods at factory gates declined 0.2 percent from November, the Office for National Statistics said today in London. Annual price growth slowed to 4.8 percent, the least in a year. On the month, economists had forecast a 0.1 percent gain in December, according to the median of 17 estimates in a Bloomberg News survey.
Declines in prices for commodities such as oil may ease inflation pressure in the economy as producers and manufacturers pass lower costs onto consumers. The Bank of England, which maintained its bond-purchase target at 275 billion pounds ($422 billion) yesterday, has forecast that consumer-price growth will ease “sharply” this year.
“Output-price inflation has been fairly benign over recent months,” said Victoria Cadman, an economist at Investec Securities in London. “That should contribute to the sharp fall in headline inflation that we expect to see early this year.”
Out of 10 categories, four recorded declines in prices, four rose and two were unchanged. Prices for petroleum products dropped 0.9 percent in December from November as diesel and gas oil fell 1.2 percent. Chemical and pharmaceutical prices declined 0.9 percent. Food prices rose 0.1 percent.
