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mpc: 10 input price index had risen to 57.1 in November, the highest for four years. Seasonally adjusted total output prices excluding excise duties (PPIY) had risen by 0.1% in October, to give an annual inflation rate of 0.9%. The seasonally adjusted CBI output price expectations balance had risen to ­7 in November, the highest since February 1998. In November's CIPS services survey, the average prices charged index had risen to 53.2, the highest for two and a half years. A39 Prices of exports and imports of goods had risen by 1.5% and 1.0% respectively in the three months to September. Stripping out the oil component, export prices had fallen by 0.7% and import prices had risen by 0.2% over the same period. A40 The annual rate of change of the GDP deflator had been 1.8% in Q3, the same as in Q2. Larger rises in the household expenditure and investment deflators had been offset by smaller increases in the government consumption deflator. The retail sales deflator had fallen by 0.9% in the year to October, the lowest inflation rate in this series on record. The stronger decline in recent months had reflected slower food price inflation. A41 RPIX inflation had risen by 0.1 percentage points to 2.2% in October. The gap between services and goods inflation had widened to its highest level since September 1992. RPIX service price inflation had risen to 3.9%, largely as a result of higher insurance premiums. RPIX goods price inflation had fallen to 0.4%, mainly reflecting lower food prices. In the latest CBI Distributive Trades survey, the balance of retailers' expected prices had fallen substantially to ­1, the lowest figure since the survey had begun in 1983.

VI

Reports by the Bank's regional Agents

A42 The Bank's regional Agents had reported a continued moderate recovery in retail sales, though not as strong as the official data had indicated. Strong demand had continued for computers and mobile phones, and sales of household and electrical goods had risen, reflecting stronger housing activity. But turnover in the clothing sector had remained weak, and demand for new and used car sales had been below expectations. It had been reported that customers might be delaying purchases because of expected price reductions in the New Year. Millennium-related stockbuilding had been only moderate, with the exception of food and drink,