UK PPI Number's Softer then expected.

UK PPI input prices rose just 0.2% MoM in August, far lower than consensus of 1.4% even allowing for the upward revision to July (2.5% vs 1.8%). A more modest rise in fuel costs (+0.5%) were also offset by a 0.6% drop in input prices excluding “food, beverages and petroleum products”, effectively the core measure of input prices.

In contrast to the large shortfall in input prices, output prices rose 0.3% MoM, more or less in line with consensus of 0.4%. As result, there was a very fractional rise in manufacturing margins, but after the compression of earlier months from higher energy costs, this will be scant compensation.

Overall, the lower than expected headline PPI might provide a bit of support to short-sterling and give this morning’s retreat in GBP a little more impetus. But with the more directly relevant CPI and retail sales data still due later this week, the impact should be fleeting. Certainly, one month’s PPI data will not have MPC members rushing to re-cast their current outlook.