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Economy in Brief

U.S. Producer Prices Remain Unchanged; Core Index Up 0.1%
by Tom Moeller  September 16, 2014

The overall Final Demand Producer Price Index held steady during August (1.8% y/y) following an unrevised 0.1% uptick in July. A 0.1% rise was expected in the Action Economics Forecast Survey. Prices excluding food & energy gained 0.1% (1.8% y/y) and matched expectations.

Goods prices (34% of the total index) declined 0.3% (+1.7% y/y). A 1.5% fall (+0.2% y/y) in energy prices held back the overall index increase. Home heating oil prices fell 5.7% (-7.1% y/y) while natural gas prices were off 4.5% (+6.6% y/y). Gasoline prices were off 1.4% (-3.1% y/y) and electric power costs slipped 0.2% (+3.9% y/y). Finished food prices declined 0.5% (+3.8% y/y), the third drop in four months. Egg prices plummeted 21.5% (+2.0% y/y). Beef & veal prices edged 0.3% higher (28.6% y/y) after having surged 9.2% in July. That followed the 9.2% July upward surge. Dairy product prices gained 0.3% (12.5% y/y). Final demand prices for goods excluding food & energy remained unchanged (1.6% y/y) after a 0.2% gain during July. Passenger car prices declined 0.2% (+1.0% y/y). Private capital equipment prices held steady (1.5% y/y).

Services prices (64% of the total index) gained 0.3% (1.9% y/y) after a 0.1% uptick. Prices for transportation of passengers jumped 1.6% (4.3% y/y). Prices for transportation and warehousing of goods for final demand ticked 0.1% lower (+2.5% y/y).

Construction prices for final demand (2% of the total index) remained unchanged (3.2% y/y) following a 0.5% jump.

Intermediate demand prices of processed goods fell 0.3% (+1.3% y/y) after a 0.1% uptick.

Measured using the old formula, which is being phased out as the headline series, producer prices declined 0.4% (+2.3% y/y) after a 0.1% July uptick. Food costs retreated 0.4% (+5.0% y/y) while energy prices declined 1.4% (+0.8% y/y). Prices excluding food & energy nudged 0.1% higher (1.9% y/y) for a second straight month.

The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectations figure is available in the AS1REPNA database.

Producer Price Index (%) Aug Jul Jun Aug Y/Y 2013 2012 2011
Final Demand 0.0 0.1 0.4 1.8 1.3 1.9 3.9
  Excluding Food & Energy 0.1 0.2 0.2 1.8 1.5 1.9 --
     Goods -0.3 0.0 0.5 1.7 0.8 1.7 6.8
       Foods -0.5 0.4 -0.2 3.8 1.7 3.0 8.5
       Energy -1.5 -0.6 2.1 0.2 -0.8 0.2 17.5
     Goods Excluding Food & Energy 0.0 0.2 0.1 1.6 1.1 1.8 3.4
   Services 0.3 0.1 0.3 1.9 1.6 1.9 2.1
   Construction 0.0 0.5 0.1 3.2 1.8 2.9 2.2
Intermediate Demand - Processed Goods -0.3 0.1 0.4 1.3 0.0 0.5 8.9
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