U.K. PPI Input Prices Decline, While Output Prices Gain Ground

Release Explanation: Measures the rate of inflation of manufacturers when purchasing Goods and Services; the rate of Inflation at the factory Gate. 'Usually, an increase in the price of raw Goods and services gets passed on to the consumer, therefore this is the first stage on Retail Inflation' TheLFB-Forex.com Trade Team added.

TheLFB-Forex.com Trade Desk Thoughts: U.K. input factory prices declined for the first time in the last four months, extending the declines seen over the last year. The input prices, or the price at which producers and manufacturers buy materials and fuel, declined in April by 1.0%, much more than expected. The output price, or the price at which manufacturers sell, gained 0.6% for a fourth consecutive month. Input prices are down 5.0% from one year ago while output prices fell to 1.2% in April from one year earlier.

'The release shows that U.K. factories continue to put pressure on consumers. Output prices were again pulled higher by the pound's decline together with the rise in gas prices. To some extent, the PPI read does not justify the BoE view that sees a real danger of undershooting the inflation target,' TheLFB-Forex.com Trade Team said.

Forex Technical Reaction: The release failed to spark any reaction in the currency market. During the European session, the pound traded in a 40 pips range, below the neutral pivot point (1.5055).

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