Producer output prices reflect the prices charged by manufacturers to other sectors such as retailing, business services and construction. They will also include any taxes and duties levied on manufacturers' prices, for example those on fuels like petrol. Changes in duties set by the Chancellor in the annual Budget can have an influence on the rate of inflation for producer prices, as well as retail prices. So we sometimes also look at producer prices excluding tax effects to get a better view of the underlying situation. Price indices are also available for the materials used by manufacturers - what are called producer input prices.
Inputs are materials such as timber, fuels, metals, and food materials.
Of course, one firm's input is another firm's output, so the producer input price index also includes items like steel and plastics. The producer input price index weights materials and components according to their use as inputs by manufacturing firms. Many basic materials are also included in indices of commodity prices. Commodity price indices consist of what we call primary products, such as oil and timber. Producer input and commodity prices can rise and fall by large amounts.