How do individual UK producer prices behave?

Philip Bunn and Colin Ellis ()
Additional contact information
Colin Ellis: BVCA

No 394, Bank of England working papers from Bank of England

Abstract: This paper examines the behaviour of individual producer prices in the United Kingdom, and uncovers a number of stylised facts about pricing behaviour. First, on average 26% of producer prices change each month, although there is considerable heterogeneity between sectors and price changes occur less frequently when measured by the average for individual products. Second, the probability of price changes is not constant over time: prices are most likely to change one, four and twelve months after they were previously set. Third, the distribution of price changes is wide, although a significant number of changes are relatively small and close to zero. Fourth, prices that change more frequently tend to do so by less. And fifth, price changes are much less persistent at the disaggregated level than aggregate inflation data imply. We find that conventional pricing theories struggle to match these results, particularly the marked heterogeneity.

Keywords: Producer prices; price-setting behaviour (search for similar items in EconPapers)
JEL-codes: D40 E31 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2010-07-19
New Economics Papers: this item is included in nep-cba
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: How do Individual UK Producer Prices Behave? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0394

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