UK PPI Shows Budding Signs Of Pricing Power

Last updated 8/7/2009 5:10 AM ET (GMT -5) 2 Comments

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Boris Schlossberg

Director of Currency Research, GFT

UK PPI data printed mixed today, but some signs of pricing power were evident in the latest report. The PPI Input prices for July fell -1.4% versus forecasts of -0.7% decline driving the year over year figures to a drop of -12.2% vs. 11.0% the period prior. The sharp fall in input costs was due primarily to lower oil prices (helped by rising value of the pound) and 3.0% decline in domestically produced food materials.

PPI Output data however increased slightly more than forecast rising 0.3% from 0.2% projected. The Core Output prices which strip out the volatile energy and food components rose 0.5% vs. 0.2% expected. Although on a year over year basis core output PPI rose only 0.2%  - the lowest reading since June 2004 -  July’s number was an improvement from June when prices fell by -0.6%, confirming the bullish thesis that UK economy is stabilizing and some pricing power is returning to the producers.

Cable had little reaction to the news remaining near 1.6730 in post announcement trade. The unit has been pressured by weak earnings report from  RBS which painted a bleak outlook for the bank until 2011  and tonight’s marginal improvement in PPI prices is unlikely to have any meaningful impact on BoE policy going forward.

Comments (2)

VietTrader

August 07, 2009 at 05:01 AM ET

Hi!
All the info on your Calendar mostly are wrong the whole day, and the other day too. Please try to get them right in the future . Thank you.

bschlossberg

August 07, 2009 at 06:22 AM ET

Its been fixed. Thank you

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.