UK Raw Material Costs Rise 7.3 Per Cent But Rate of Increase Slows

ONS figures show annual producer input inflation fell from a revised 9.3 per cent in May 2026 to 7.3 per cent in June, with crude oil prices driving the slowdown.

The cost of raw materials and fuels bought by UK manufacturers rose by 7.3 per cent in the year to June 2026, the Office for National Statistics has confirmed — down from a revised 9.3 per cent in the year to May. Factory gate prices, what manufacturers charge for finished goods, rose by 3.5 per cent over the same period, compared with a revised 3.7 per cent rise in the year to May. The figures show the annual rate of input inflation fell for the first time since January 2026.

Crude oil provided the largest downward contribution to the slowdown in input price inflation, while refined petroleum products did the same for factory gate prices. On a monthly basis, input prices actually fell by 2.0 per cent in June 2026, and factory gate prices were flat at 0.0 per cent.

For Kent businesses, the picture is mixed. Manufacturers buying raw materials — from food processors to chemical and engineering firms — are still paying 7.3 per cent more than a year ago, but the monthly fall suggests some immediate cost relief. Kent’s logistics sector, including haulage and warehousing operations around the Port of Dover and distribution centres across the county, sits in a category the ONS identified as still pushing services producer prices higher: transportation and storage services provided the largest upward contribution to services producer price inflation in the period.

Construction is another pressure point. The UK material price index for all work rose 5.4 per cent in May 2026 compared with May 2025, according to the Department for Business and Trade. Deliveries of bricks fell 4.4 per cent and blocks by 9.1 per cent over the same period year-on-year — figures that point to squeezed demand as well as higher costs hitting Kent housing and infrastructure schemes.

Producer prices are watched closely as a pipeline indicator: what manufacturers pay today tends to feed through into what consumers pay later. So easing input and output inflation doesn’t cut prices now, but it can slow the rate at which they rise. The Bank of England and HM Treasury both use ONS producer price data to assess inflationary pressure in the production sector. Producer price indices are published at UK level and are not broken down by individual county, so Kent-specific figures remain unavailable.