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November 2011 | Angeline Albert
pressure on UK producers’ raw material costs in October is creating a “buyers’
market” according to the Office for National Statistics.
The Producer Price Index (PPI),
published by the Office for National Statistics on Friday, revealed a fall in manufacturers’ input costs, particularly oil,
which is resulting in better prices for producers’ buyers.
which measures the price movement of goods bought (input) and sold (output) by
UK manufacturers, shows that between September and October, the total input price index
fell 0.8 per cent, mainly reflecting price drops in crude oil, imported metals
and home produced food.
Producers’ costs fell by 0.5 per cent in August, September and October,
a trend that allowed manufacturers to keep their average selling prices for
purchasers unchanged last month.
Chris Williamson, chief economist at
Markit, said: ”Further downward pressure
on manufacturing input costs and selling prices is likely in coming months, as
slowing global demand for commodities means an increasing shift to a buyers'
market for many goods and earlier steep price rises fall out of year-on-year
Prices manufacturers’ charge at the factory gate in October were up by
5.7 per cent on a year ago, but this is the lowest rate of increase since May
and down from 6.3 per cent in September. Between
September and October, the price of imported materials as a whole, including
crude oil, fell 1.2 per cent.
this month, the Markit/CIPS PMI showed that the UK manufacturing sector had
fallen back into contraction in October and was at a 28-month low following a
decline in output, new orders and employment.
Williamson added: "The gloomier picture is that price falls are a
symptom of very weak global demand and merely highlight the difficulties that
manufacturers and their suppliers are facing at the moment.”