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V

Prices

A37 The Bank oil-inclusive commodity price index had risen by 1.9% in December. The annual inflation rate rose from 17.8% in November to 21.8% in December. The monthly rise had partly reflected the rise in crude oil prices in December: the Brent one-month futures price had risen by 4% (in sterling terms). Excluding oil, commodity prices had risen by 1.3% in December to give an annual inflation rate of 3.7%. Metals prices had risen strongly again, and there were signs that domestic food prices may have reached their trough. A38 Seasonally adjusted manufacturing input prices had risen by 0.7% in December, taking the annual inflation rate from 10.0% to 12.0%, the highest rate since 1985. This largely reflected the recent rise in crude oil prices, but import prices as a whole had also risen sharply on the year. According to the latest CIPS manufacturing survey, the input prices index had risen to +56.3 in January, up from +55.4 in December. Seasonally adjusted total output prices excluding excise duties (PPIY) had risen by 0.2% in December, to give an annual inflation rate of 1.5%, slightly up from 1.2% in the previous month. The latest quarterly BCC output price intentions balance had risen for both the manufacturing and service sectors. A39 Export and import prices had risen by 0.2% and 1.3% in November. Stripping out the oil component, export and import prices had fallen by 2.3% and 0.7% in the previous three months compared with the same period a year earlier. A40 RPIX inflation had remained at 2.2% in December, unchanged since October. The wedge between RPIX services and RPIX goods inflation had widened to its greatest level since September 1992. RPIX service price inflation had remained unchanged at 3.9%. The largest positive contributions had come from leisure and vehicle insurance. RPIX goods price inflation had fallen to 0.3%, the lowest rate on record, mainly reflecting lower tobacco and seasonal food prices.

VI

Reports by the Bank's regional Agents

A41 The Bank's regional Agents had reported continued widespread, if moderate, recovery in manufacturing output and orders. The improvement in orders had been evenly spread between domestic and external orders. There had been stronger growth in business services mainly related to information technology, corporate restructuring and property. Steady growth was also reported in consumer