16th September 2026
UK businesses are facing a fresh increase in their costs, with producer price inflation accelerating sharply in August, according to the latest figures from the Office for National Statistics (ONS).
Producer input prices — the cost of materials and fuels bought by UK manufacturers — rose by 6.1% in the year to August, up from a revised 5.8% in July.
At the factory gate, meanwhile, producer output prices rose by 3.7%, compared with 3.3% in July.
The figures provide another indication that the recent surge in energy and oil prices is beginning to work its way through the UK economy.
Oil is at the heart of the increase
Crude oil prices were 26.7% higher than a year earlier in August, making crude oil one of the largest upward contributors to producer input inflation.
But the pressure becomes even clearer when refined petroleum products are considered.
Prices for inputs of other produced materials rose by 2.1% in August alone, with the ONS saying the increase was largely caused by higher prices for refined petroleum products.
For manufacturers, this matters because petroleum products feed into a huge range of business costs, directly through fuel and indirectly through transportation, logistics and industrial processes.
The impact is already visible at the factory gate.
Prices for coke and refined petroleum products sold by UK manufacturers were 49.1% higher than a year earlier, having risen by a further 8.6% during August.
That is a substantial increase and represents one of the clearest signs yet of the oil shock moving through the production system.
Import costs are rising too
The pressure isn't confined to domestically produced goods.
The Import Price Index increased by 6.5% in the year to August, compared with 5.4% in July.
Import prices rose by 0.7% during August, with the annual increase mainly attributed to higher prices for refined petroleum products imported from outside the European Union.
This creates a potentially difficult environment for British businesses.
Companies importing materials face higher costs, while domestic manufacturers are simultaneously dealing with more expensive energy, transport and raw materials.
Some businesses will absorb those increases through lower profit margins.
Others will attempt to pass them on through higher prices.
The consumer impact could come later
Producer inflation is important because it can act as an early warning signal for consumer prices.
There is not a one-for-one relationship between producer and consumer inflation. Businesses can absorb some costs, change suppliers, use existing stocks or improve efficiency.
But sustained increases in production costs eventually create pressure to raise selling prices.
That makes the latest figures particularly significant given that UK consumer inflation has already risen to 3.1% in August.
The risk is that another wave of higher business costs could make it harder for inflation to return quickly towards the Bank of England's 2% target.
The Middle East crisis is now clearly visible
The ONS says its latest producer-price data continue to be affected by the conflict in the Middle East.
The figures provide a snapshot of an economy already being affected by the energy shock — but they may not yet capture the full consequences of the latest disruption.
If oil prices remain elevated and global inventories continue to be drawn down, businesses could face another period of rising costs during the autumn and winter.
A warning for households
For consumers, the concern is that the producer-price figures could eventually translate into higher prices for goods and services.
Transport is an obvious example, but the effects can extend much further.
Higher diesel and petrol prices increase delivery costs. Higher energy prices increase manufacturing costs. More expensive imported materials raise the cost of finished products.
The result can be a chain reaction:
higher oil prices → higher business costs → higher producer prices → pressure on retail prices.
The latest ONS figures suggest that the first two stages of that process are already firmly underway.
The big question now is whether the oil shock proves temporary or becomes embedded in business costs.
If energy prices settle, some of the pressure could fade.
If they remain high, however, August's producer inflation figures could prove to be an early warning of another difficult period for UK businesses — and potentially for consumers too.
Source: Office for National Statistics (ONS), Producer price inflation, UK: August 2026. Published 16 September 2026
https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/producerpriceinflation/august2026