The Office for National Statistics has reported a sharp easing in annual input-cost inflation for UK manufacturers during July, although metals, chemicals, and several factory-gate categories remained materially above year-earlier levels.
Producer input prices rose by 4.9% in the year to July 2026, down from a revised 7.4% in June. Producer output, or factory-gate, prices increased by 3.1%, compared with 3.5% a month earlier. On a monthly basis, input prices fell by 1.7%, while output prices rose by 0.2%.
Crude oil produced the largest downward contribution to the change in annual input inflation. Oil input prices were still 10.6% higher than a year earlier, but that compared with a revised 41.9% annual increase in June. Monthly crude-oil prices fell by 18.0% in July following a revised 20.9% fall in June.
The headline improvement was much less pronounced across several core industrial inputs. Metals and non-metallic mineral products were 8.4% more expensive than in July 2025, with increases linked to basic iron, steel, ferro-alloys, and non-EU imports of precious metals, particularly silver. Chemical input prices rose by 6.1% over the same period.
Those movements leave manufacturers with sharply different purchasing conditions according to material exposure. Businesses using energy-intensive metals, resins, chemicals, imported components, or specialised feedstocks can experience a cost profile that bears little resemblance to the aggregate index, especially when contracts, hedging, inventories, and currency movements delay the effect of spot-market changes.
Import-price inflation also slowed. The Import Price Index rose by 5.2% in the year to July, down from a revised 9.0% in June, and fell by 2.5% on the month. Sterling’s effective exchange-rate index was 0.6% higher than a year earlier, compared with a 1.4% annual fall in June.
Factory-gate prices show a similarly uneven pattern. Coke and refined petroleum products were 30.1% more expensive than a year earlier, although prices fell by 2.9% during July. Other manufacturing outputs rose by 4.6% annually, reflecting higher plastic-product prices and increased charges for repair services covering fabricated metal products, machinery, and equipment.
Basic metals, fabricated metal products, and machinery recorded a 5.0% annual increase in output prices, with higher machining-service prices among the main drivers. Computer, electronic, and electrical products rose by 4.4% year on year, accelerating from 3.1% in June.
Two major groups moved in the opposite direction. Prices for motor vehicles and other transport equipment were 1.6% below July 2025 levels, while food-product prices fell by 0.8%. Eight of the ten output groups nevertheless made upward contributions to the annual factory-gate inflation rate.
The relationship between input and output inflation remains important for industrial margins. Materials and fuels purchased by manufacturers rose by 4.9% over the year while prices received at the factory gate increased by 3.1%. Individual businesses will experience different combinations, but the aggregate gap indicates that cost pressure has not disappeared simply because the input rate has fallen from its earlier peak.
July’s data were also affected by the conflict in the Middle East. The ONS linked higher plastic-product prices to increased PVC and resin input costs, while oil and refined petroleum products continued to show unusually large annual movements. Energy and petrochemical volatility can therefore change both headline and sector-level readings rapidly from one month to the next.
The latest estimates remain provisional. The ONS notes that producer-price figures for the most recent 12 months can be revised as additional survey returns are received and validated, while oil and energy estimates are also updated as more complete volume and value information becomes available.
Response rates for the July release were stronger than a year earlier across the domestic Producer Price Index, Import Price Index, and Export Price Index, reaching 83.4%, 80.7%, and 79.3% respectively. The improvement strengthens the initial evidence base without eliminating the normal revision process.
July therefore marks a substantial reduction in the pace of producer input inflation rather than a broad reversal of industrial prices. Crude oil drove much of the slowdown, while metals, chemicals, machinery-related outputs, electronics, and imported materials continued to rise. Autumn purchasing and pricing decisions will be made against a lower headline rate, but still with significant cost pressure embedded in several of the categories manufacturers buy most heavily.
