Live news: UK motor insurance prices rise by £100 in a year

UK producer price inflation slowed to the lowest rate in almost a year in December, as cost pressures recede.

Producer input prices — the prices paid by businesses for materials and other goods — rose by an annual rate of 16.5 per cent in December, down from 18.0 per cent in the previous month, and well below the peak of 25 per cent in June 2022, according to data published by the Office for National Statistics on Wednesday.

Factory gate prices rose by an annual rate of 14.7 per cent in December, down from 16.2 per cent in the previous month and a recent peak of 20 per cent in July.

The ONS said the decline was driven by the prices of equipment and petrol.

Despite the decline, producer price inflation remained high by both historical standards and compared with other countries. It averaged 2.4 per cent between 1985 and 2020, before Russia’s invasion of Ukraine sent gas and food prices soaring.

PPI is falling less sharply in the UK than in Germany, where it halved between August and December, according to separate official data.

High price pressures, and their impact on spending and activity, are expected to push the UK economy into recession this year.

“A combination of high inflation, falling real incomes, rising interest rates and tighter fiscal policy are the primary drags on growth,” said Hywel Ball, EY’s UK chair in his winter UK economic forecast.