UK producer prices fall: what the analysts say The benign set of producer price data will be well received by the Bank of England. The data supports belief that consumer price inflation is headed down sharply over the coming months, and fuels already strong belief that the Bank of England will enact at least £50bn more Quantitative Easing in February. Samuel Tombs, UK economist at Capital Economics: A sharp drop in both input and output price inflation in December had always looked likely, given the sharp rise in prices a year ago. Nonetheless, today's figures confirmed that disinflationary pressure in the economy is building. Admittedly, output price inflation only affects consumer price inflation after a fairly long lag, so its fall will not do much to help inflation to drop this year. Philip Shaw, economist at Investec: The PPI [producer price inflation] numbers are encouraging. The fall in factory gate inflation not only reflects helpful base effects but also lower pressures from input cots over recent months. A sharp decline of inflation at a CPI [consumer price inflation] level certainly looks to be on the cards. We are a little bit more cautious than the Bank of England about the extent to which inflation is likely to come down over course of this year. But nonetheless we concur in the sense that we see the target measure falling at a fast pace. That's consistent with the data release. We think it would take a major surprise to derail more QE in February. But the inflation numbers are still consistent with more easing in May.