UK producer prices continued to surprise on the upside of expectations in March. Input PPI rose by 3.7% M/M led by higher prices for oil (9.8% M/M) and gas (4.1% M/M). On a yearly basis, input PPI is up by almost 15% Y/Y. Output PI continued to increase too, but at a slower pace. On a monthly basis, output PPI rose by 0.9% M/M, while an increase by 0.6% M/M was forecasted. Also gains in output prices were led by petroleum products (3.9% M/M), while also prices of food, beverages and tobacco (0.7% M/M) and core prices (0.4% M/M) increased in March.
In the UK, the only certainty on economic data is that inflation is ever moving higher. As PPI data measure inflationary pressures in the pipeline, they are leading compared to the CPIand therefore indicate that we may expect inflationary pressures to continue to rise in the coming months, increasing pressure on the Bankof England to raise rates in the coming months, probably already in May.