Annual output inflation down from 3.2% in April to 2.8% in May; annual input inflation down from 1.0% in April to 0.1% in May
Commenting on the producer price figures for May 2012, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said: “The decline in producer price inflation was better than expected, with both output and input measures at their lowest level since 2009. On this basis, we expect consumer price inflation to continue to fall over the next few months. This will ease the pressures facing businesses and consumers and provide a boost to consumer spending. “But the economic situation both at home and abroad remains difficult, and strengthening growth should be a top priority.
While the government must persevere with measures to reduce the deficit, it should readdress priorities towards growth within the existing spending envelope. The lower inflation figures may make the MPC more inclined to increase QE, but we believe its focus should be encouraging lending to credit-worthy businesses.”