In December, British manufacturers unexpectedly cut their prices by the most since April 2020. This is good news for the Bank of England.

In December, British manufacturers unexpectedly cut their prices by the most since April 2020. This is good news for the Bank of England, which is determining how much higher it should raise interest rates to combat the country's skyrocketing inflation.

As compared to November, output prices decreased by 0.8% in December, the Office for National Statistics said on Wednesday.

According to the ONS, input prices paid by manufacturers decreased by 1.1% month over month, which is also the largest decrease since April 2020, when a large portion of the British economy collapsed at the outset of the coronavirus crisis.

According to Reuters' survey of economists, producer output prices were forecast to increase by 0.3% on a monthly basis while input costs were projected to decrease by 0.6% on a monthly basis.

The consumer prices index, the primary inflation indicator used in Britain, decreased in November and December, but its 10.5% level is still more than five times the BoE's objective.

The central bank is keeping a close eye out for potential inflationary pressure. On February 2, investors anticipate the BoE to boost interest rates for the tenth consecutive time, with the majority pricing in an additional 0.5 percentage point increase to 4%.

After the statistics agency discovered issues with the pricing data it uses, the ONS producer price inflation figures for the months of November and December were released later than expected.

In terms of yearly growth, input price growth was 16.5% in December after reaching a record high of 24.6%, while output price growth was 14.7%, its seventh consecutive decline.

According to the ONS, output prices increased by 16.2% annually and decreased by 0.1% monthly in November, while input prices increased by 18.0% annually and increased by 0.2% monthly.

It said that the changes to its data corrections, which date back to January 2021, had no effect on the main indexes.

(investing.com, reuters.com)