UK Producer Prices Unchanged in July
THE TAKEAWAY: UK producer prices remain unchanged in July, as expected -> Raw material costs rise 1.3% -> Sterling trading lower in today’s session
The UK output price index remained steady in July, thereby relieving two month of decline and meeting analysts’ expectations. Producers’ output prices were up 1.7% when compared to July 2011, according to the Office for National Statistics. June’s output prices were revised 0.6% lower than the previous month.
Raw material prices for producers were up 1.3% in July, as expected, and the PPI for input was 2.4% lower than July of 2011. Factory output prices were steady in July, while food, beverages and tobacco output prices were 0.1% higher.
The steady producer prices tell a different story than the BoE monthly report released on Wednesday. The bank’s report cut its inflation forecast to 1.6% within two years. However, BoE Governor King said current inflation levels don’t call for the use of more stimulus.
Sterling did not significantly react to the PPI’s, but continued an upward reversal of some of the session’s earlier losses against the US Dollar. GBPUSD has been trading in a 140 point range over the week and support could come in by 1.5518, by a two-month upward trend line. Resistance has been provided over the past few months around 1.5750.
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