U.K. Producer Prices Climb Higher in May

U.K. May factory gate prices rose 0.4% m/m and declined 0.3% y/y, largely in line with market expectations for 0.3% m/m and -0.4% y/y and compared to 0.7% m/m and 1.3% y/y in April (revised from 0.6% and 1.2% respectively). Annual PPI rates continue to decelerate due to the base effect, and the core output reading slipped to 1.1% y/y from 2.5% y/y in April (revised from 2.4%). Meanwhile, input prices rose 0.4% m/m, underpinned by higher oil prices, and was down 9.4% y/y, versus -1.7% m/m and -5.8% y/y in April (revised from -1.0% and -5.0% respectively). The increase to the m/m readings highlight that some stickiness remain. The past sterling weakness means that producers can increase their international competitiveness without having to reduce prices which improve the room to maneuver for export oriented companies.