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Economy in Brief

U.S. Producer Prices Edge Higher
by Tom Moeller  December 11, 2018

The headline Final Demand Producer Price Index using new methodology ticked 0.1% higher (2.5 % y/y) during November following a 0.6% October increase. No change in the index had been expected in the Action Economics Forecast Survey. Producer prices excluding food & energy rose 0.3% (2.7% y/y) after a 0.5% jump. A 0.2% gain had been anticipated. The PPI excluding food, beverages and trade services is another measure of underlying price inflation. It also rose 0.3% (2.8% y/y) last month following a 0.2% increase.

The PPI using the old methodology fell 0.8% during November (+1.6% y/y) following a 0.8% October decline. Prices excluding food & energy improved 0.3% (2.4% y/y) after holding steady in October.

The moderate gain in producer prices overall reflected a 0.3% increase (2.6% y/y) in services prices. It followed a 0.7% rise. The cost of trade of finished products rose 0.3% (2.2% y/y) after a 1.6% jump in October. Passenger transportation costs surged 2.3% (4.8% y/y) after a 1.1% gain. Transportation & warehousing of goods costs rose 0.8% (6.4% y/y) following a 0.3% rise. Final demand for services prices excluding trade, transportation & warehousing gained edged 0.1% higher (2.6% y/y) after a 0.2% rise.

Goods prices decreased 0.4% (+2.2% y/y) last month after a 0.6% October rise. Goods prices excluding food & energy eased 0.3% (+2.5% y/y) following no change. Durable consumer goods prices held steady (1.7% y/y) after a 0.2% decline. Household furniture prices held steady (2.8% y/y) as the cost of appliances fell 0.6% (+2.3% y/). Core nondurable consumer goods prices strengthened 0.9% (3.4% y/y). Capital equipment prices rose 0.2% (2.0% y/y). Government purchased goods prices less food & energy ticked 0.1% higher (2.3% y/y) for a second straight month.

Energy product prices declined 5.0%  (+2.9% y/y) as gasoline prices weakened 14.0% (-1.2% y/y) after a 7.6% rise and home heating oil prices fell 3.1% (+25.3% y/y). Working to offset these declines was a 3.3% surge in natural gas prices (-0.1% y/y). Electric power costs rose moderately m/m (+0.3% y/y).

Food prices strengthened 1.3% last month (0.4% y/y) after a 1.0% increase. The rise was led by a one-third jump (9.7% y/y) in fresh & dry vegetable prices. Egg prices rose 12.2% but still were down 10.9% y/y. Beef & veal prices rose 2.7% (4.1 y/y) but the cost of pork fell 1.1% (-4.8% y/y). Dairy product costs eased 0.8% (-2.1% y/y).

Construction prices improved 0.2% (5.1% y/y) after a 1.9% strengthening.

Prices for intermediate demand processed goods declined 0.7% (+4.3% y/y) and offset a 0.8% rise during October.

The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. West Texas Intermediate Crude Oil prices are found in the WEEKLY database while the expectations figures are available in the AS1REPNA database.

Producer Price Index (SA, %, New Methodology) Nov Oct Sep Nov Y/Y 2017 2016 2015
Final Demand 0.1 0.6 0.2 2.5 2.3 0.4 -0.9
   Excluding Food & Energy 0.3 0.5 0.2 2.7 1.9 1.2 0.8
   Excluding Food, Energy & Trade Services 0.3 0.2 0.4 2.8 2.1 1.2 0.6
   Goods -0.4 0.6 -0.1 2.2 3.3 -1.4 -4.3
      Foods 1.3 1.0 -0.6 0.4 1.2 -2.8 -2.6
      Energy -5.0 2.7 -0.8 2.9 10.4 -8.4 -20.6
    Goods Excluding Food & Energy -0.3 0.0 0.2 2.5 2.2 0.7 0.4
   Services 0.3 0.7 0.3 2.6 1.8 1.4 0.9
      Trade Services 0.3 1.6 0.1 2.2 1.5 1.3 1.3
   Construction 0.2 1.9 0.1 5.1 2.2 1.1 1.9
Intermediate Demand - Processed Goods -0.7 0.8 0.0 4.3 4.7 -3.1 -6.9
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