UK Producer Prices Rise 1.9% as Input Costs Fall, Retail Stocks Slide

The U.K. Office for National Statistics said producer output prices rose 1.9% in June from a year earlier, while input prices fell 1.0%. The combination of higher factory-gate prices and cheaper raw materials underscores the uneven nature of inflationary pressures as the Bank of England gauges how quickly cost increases are working through supply chains. Equity investors reacted warily. Shares in consumer-facing retailers slid after Deutsche Bank warned that a cooling labour market and rising household bills could squeeze spending in the second half of the year. Kingfisher dropped 4.3%, Associated British Foods lost 3.5% and DIY chain Wickes tumbled 8.6%. The caution comes against a backdrop of stubbornly high grocery bills. Separate industry data this week showed food price inflation accelerating to its highest level in 17 months, led by staple items such as eggs and butter, highlighting the risk that persistent cost increases in supermarkets could spill over into broader consumer prices.