LOWER PRODUCER PRICE INFLATION WILL REDUCE SQUEEZE SAYS BCC
April 13 2012.


Commenting on the producer prices for March 2012 published today by the Office of National Statistics, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: "These figures show a welcome decline in the pace of producer price inflation, which will help to reduce the current squeeze on businesses and consumers. However, the fall was not as sharp as many analysts were expecting. On this basis, we expect the downward trend in inflation to continue throughout the year, but at a slower pace than the Monetary Policy Committee  predicted. Increases in oil and food prices have reinforced concerns about the outlook for inflation, and although there are signs that these pressures are easing, the situation will remain uncertain for some time.

"If the MPC is faced with a slower fall in inflation, it would reinforce the case against further increases in QE. We believe that additional increases are unnecessary, but existing QE should be made more effective by helping to increase lending to credit-worthy businesses."


ONS Report Key Points
- In the year to March 2012 the output price index for home sales of manufactured products rose 3.6 per cent, compared with a rise of 4.1 per cent last month. The last time the annual rate was lower was in January 2010, when the index rose 3.5 per cent.

- Between February and March the output index for home sales of manufactured products rose 0.6 per cent.

- In the year to March 2012 the output price index excluding food, beverages, tobacco & petroleum rose 2.5 per cent, compared with a rise of 3.0 per cent last month.

- Changes in excise duty are estimated to have added less than 0.1 per cent to the overall output index in March 2012.

- In the year to March 2012 the total input price index rose 5.8 per cent, compared with a rise of 7.8 per cent last month. The last time the annual rate was lower was in November 2009, when the index rose 3.9 per cent.

_ Between February and March the total input price index rose 1.9 per cent.