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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (44590)	1/16/2006 1:24:14 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

UK output prices fell for 3rd straight month in Dec UPDATE Monday, January 16, 2006 10:13:19 AM afxpress.com LONDON (AFX) - Manufacturers continued to find it difficult to pass on increases in their raw material costs during December, official figures showed today Even though the annual rise in input prices during the month was the highest since records began in 1991, the office for National Statistics revealed that output prices fell for the third consecutive month for the first time since August 2001 Howard Archer at Global Insight believes that the inability to put up prices will put a further squeeze on profit margins and in turn weigh on employment and investment in the manufacturing sector. "Clearly, manufacturers are still finding it extremely difficult to pass on their high input costs amid continuing intense competition within the sector and relatively soft demand, but a key question going forward is, will these higher input prices increasingly filter through the supply chain?" he asked Data in the coming months will hold the answer, but the figures out today showed that between November and December, output prices, on a non-adjusted basis, fell by 0.2 pct. Although the fall was less than the previous month's 0.3 pct, analysts had actually predicted a 0.1 pct increase Despite the monthly decline, output prices were up on an annual basis, because the equivalent 0.4 pct decline in December 2004 dropped out of the comparison. As a result, output prices, on a year-on-year basis, rose by 2.4 pct, higher than November's 2.2 pct, but below analysts' forecasts of a more hefty 2.7 pct increase The statistics office said the main reason behind the monthly fall between November and December was a 2.5 pct price fall in petroleum products prices, which in turn reflected a 2.7 pct decline in unleaded petrol and a 1.2 pct fall in diesel Petroleum product prices have fallen 6.5 pct since their peak level in October Partly offsetting the rise in petroleum product prices was a 0.6 pct rise in chemical products Even stripping out more volatile components such as food, beverages, tobacco and petroleum, today's data did little to raise concerns about inflationary pressures in the pipeline The core rate rose by only 0.1 pct in December from the previous month, in line with forecasts. On an annual basis, the core rate was up 1.6 pct, 0.1 percentage point higher than expectations In November, the core rate was up a monthly 0.2 pct while the annual increase was 1.3 pct The subdued monthly output prices may come as a surprise to some analysts and officials at the Bank of England because of another increase in input prices, which rose 0.9 pct in December from November on a seasonally adjusted, just shy of analysts' expectations of 1.0 pct On a year-on-year basis, input prices were up 17.2 pct, higher than analysts' expectations of a 15.7 pct increase. The December rise was the highest since records began in 1991 In November, input prices were up a monthly 1.9 pct and an annual 13.4 pct The rise in the monthly rate main reflected price rises in fuel, crude oil, metals and produced foods, while the annual rate was badly affected by an 81.2 pct increase in gas prices -- the largest annual rise since records began in 1991