UK Factory Gate Prices Rise Slows to 1.7% in Year to February 2026

Factory gate prices across the UK rose by 1.7% in the year to February 2026, marking a notable slowdown from the 2.5% increase recorded in January, according to new figures from the Office for National Statistics.

The Numbers Behind the Shift

The ONS announced the latest Producer Price Index data on 25 March 2026, revealing a mixed picture for UK manufacturers. While output prices – what factories charge for their goods – continued to rise, the pace of increase moderated much.

Input prices told a different story entirely.

Manufacturing input costs, covering materials and fuels purchased by UK producers, rose by 0.5% in the year to February 2026. This represented a sharp turnaround from the revised 0.4% fall recorded in January, signalling fresh pressure on manufacturers’ cost bases.

What the Data Reveals

The Producer Price Index serves as a leading indicator for consumer inflation, tracking price changes at the factory gate before they reach shop shelves. February’s figures suggest a cooling in the pricing pressures that manufacturers can pass on to customers; yet rising input costs may squeeze profit margins across industrial sectors.

Historical context shows UK factory gate prices have averaged 5.04% annually since 1964, according to Trading Economics citing ONS data. The current 1.7% rate sits well below this long-term average, though it remains positive after periods of deflation during economic downturns.

Manufacturing Under Pressure

The divergence between moderating output prices and rising input costs creates a challenging environment for UK manufacturers. Companies face the difficult choice of absorbing higher material and energy costs or attempting to pass them through to customers in a competitive market.

Energy and raw material price fluctuations continue to influence the input price index, with petroleum-based products and imported materials chiefly volatile. The ONS Business Prices team tracks these movements monthly, providing central data for economic policymaking and business planning.

Key Takeaways

• Factory gate prices rose 1.7% year-on-year to February 2026, down from 2.5% in January
• Input prices turned positive at 0.5% annually, reversing from a 0.4% decline the previous month
• The divergence between output and input prices suggests margin pressure for UK manufacturers

What This Means for Kent Residents

Kent’s manufacturing sectors, including food processing in Thanet and automotive components in Medway, will likely face squeezed margins as input costs rise faster than output prices. Local businesses dependent on energy and raw materials may need to pass the 0.5% input price increase on to consumers, potentially affecting prices across Kent’s retail and construction sectors. Residents should monitor energy bills and household goods prices in coming months, as these factory-level cost pressures typically filter through to consumer prices within three to six months.