UK Producer Inflation Hits 10-Month Low

Factory gate prices for UK-manufactured goods rose 1.7% year-on-year in February 2026, easing from a 2.5% increase in January and defying expectations of a slight pickup to 2.6%. This marked the softest reading since April last year, with the main downward pressure coming from coke and refined petroleum products, where prices fell 8.6%, deepening from a 7.7% decline and providing the largest drag on the overall rate. Producer inflation also moderated for motor vehicles and transport equipment, with annual price growth slowing sharply to 1.8% from 5.5%. Meanwhile, producer inflation eased for food products (2.4% vs 3.2%) and other manufacturing outputs (2.7% vs 2.9%), though both remained key upward contributors, with food prices partly driven by higher beef costs amid supply and demand pressures. On a monthly basis, producer output prices fell 0.5%, after being unchanged in January and defying forecasts of a 0.2% rise.

Factory gate prices for UK-manufactured goods rose 2.5% year-on-year in January 2026, easing from a downwardly revised 3.1% increase in December. This marked the lowest reading since late June, driven by weaker energy-related price pressures. Prices for coke and refined petroleum products fell 8.4% annually, deepening from a 1.7% decline in December and providing the largest downward contribution to the overall rate. Meanwhile, although inflation slowed for food products (3.4% vs 4.1%), partly driven by processed and preserved meat, and for motor vehicles and other transport equipment (5.5% vs 6.4%), both remained the largest upward contributors to factory gate inflation. Inflation also rose for alcoholic beverages and tobacco (1.6% vs 0.8%), basic metals and machinery (3.6% vs 3.5%), and computer, electronic, and electrical products (1.6% vs 1.2%). On a monthly basis, producer output prices were unchanged, following a 0.1% fall in December.

Factory gate prices for UK-manufactured goods rose 3.4% year-on-year in December 2025, unchanged from the previous month. All ten product groups contributed upward pressure to the annual rate, with the largest contribution coming from food products, where prices increased by 4.3%, slightly accelerating from a 4.2% rise in November, partly driven by higher prices for processed and preserved meat. Inflation also picked up for textiles (4.9% vs 4.8%) and rebounded for paper and paper products (0.2% vs -0.2%) as well as coke and refined petroleum products (0.1% vs -0.6%). Meanwhile, price growth for motor vehicles and other transport equipment eased to 6.3% from 7.2%, exerting downward pressure on the annual rate. Costs also rose at a slower pace for basic metals (3.6% vs 4.0%) and chemical and pharmaceutical products (1.8% vs 2.1%). On a monthly basis, producer output prices were unchanged, compared with November and market expectations of a 0.1% gain.