PPI Input YoY

PPI Input YoY (Producer Price Index for inputs, year-on-year) measures the 12-month % change in materials and fuels bought by UK manufacturers. It covers goods sourced at home and abroad, including final-product items and daily plant fuels. The Office for National Statistics (ONS), the UK national statistics body, compiles it from manufacturers classified to industrial codes 08 to 33. It tracks the All materials and fuels purchased index (base 2015 = 100), not factory-gate output (prices received for goods sold).

Respondents price transactions near the start of the month and reply within 10 days; later moves enter the next index. Publication is monthly, about two to three weeks after the reference month, with import prices (goods from abroad) and export prices (goods sold abroad). Each release also shows factory-gate output prices and the sterling effective exchange rate, plus services prices (SPPI) in quarter months. The two newest months are provisional and 12 months stay open to revision. A positive rate means prices rose, and a negative one means they fell.

Input costs shift with energy, metals, food, chemicals, equipment and imports.

• Other parts and equipment, 24.1%: the largest weight: parts and equipment bought in for production.
• Metals and non-metallic mineral products, 20.6%: iron, steel, ferro-alloys and precious metals.
• Chemicals, 17.2%: plastics and resins in primary forms.
• Food, domestic and imported, 13.1% and 2.4%: cereals, livestock, dairy and produce.
• Crude oil, refined products and fuel, 6.9%, 9.8% and 2.5%: crude, ores, refined fuels, electricity and gas.
• Beverages and tobacco plus other inputs, 0.4% and 3.0%: drink, tobacco and remaining inputs.

Imports are roughly one-fifth of total input weight. In the year to June 2022 (released 20 July 2022), input prices rose 24.0%, up from 22.4%, the highest since records began in January 1985. Metals gave the largest push at 5.62 percentage points with growth of 26.0%. Crude oil jumped 94.8% and imported inputs rose 21.4%, their highest ever, as the pound fell 3.3%. The first print of 24.0% later moved through 24.1% to 24.4%, showing the 12-month revision rule at work. Tobacco and alcohol rose 3.4% yet dragged on the rate because annual chain-linking had cut its share in the index.

1. Collect prices: Survey manufacturers for transactions near the start of the month, with replies due within 10 days and data sources following the same rule.
2. Strip taxes: Remove VAT (Value Added Tax) everywhere, plus excise duties on cigarettes, manufactured tobacco, alcohol and petroleum products from the headline. Duty-paid versions are labelled apart. The input index also leaves out the Climate Change Levy.
3. Quality-adjust and compare: When a product changes, keep only pure price change. Then form a price relative of current over base price for each item.
4. Weight by spending: Give each item a weight (share of base-period sales) and scale sales to the base year. ProdCom sales minus exports feed the weights, with yearly price uprating.
5. Chain-linked Laspeyres link: Combine each year as a Laspeyres average (relatives times weights, summed) and scale-link yearly links into one chain (base 2015 = 100).
6. Year-on-year rate and contributions: Divide the index gain over 12 months by the year-ago index and multiply by 100. Split the move into contributions (weight times rate effects). Positive means prices rose and negative means they fell, but rounding can break exact sums.
7. Teaching example: In a two-item teaching basket, oil at 6.9% with relative 1.60 outweighs parts at 24.1% with 1.05 when oil prices jump. The link index is 105.35; against 99.20 a year earlier the rate is +6.2%, led by oil despite its small weight.
8. Validate and publish: Flag jumps past group thresholds with the seller and review the thresholds regularly. Then publish the two newest months as provisional, revising 12 months as late data land.