·
The PPI for finished goods surged 1.7% last month, nearly triple Consensus
expectations for a 0.6% gain and the strongest monthly increase since
January 1990. Less food & energy, the 0.3% rise in "core"
prices also was triple expectations for a 0.1% gain.
· Finished energy prices spiked 6.8% (17.0% y/y) higher paced by a 14.2% (45.3% y/y) rise in gasoline prices and an 18.7% (66.4% y/y) gain in fuel oil prices. Residential natural gas prices rose 1.7% (8.2% y/y).
· A 0.2% gain in core finished consumer goods prices reflected a modest 0.2% (1.7% y/y) gain in nondurable goods prices but durables prices rose 0.4% (1.6% y/y) for the second consecutive month. Finished capital goods prices also rose 0.4% (1.9% y/y) for the second month.
· Finished food prices jumped 1.6%
(2.4% y/y) reflecting strong gains in prices for fruits, vegetables and
meats.
· "Cattle prices on a two-year wild ride" from the Federal Reserve Bank of Minneapolis can be found here.
· Crude prices reversed the prior month's decline with a 4.3% jump. Less food & energy, crude prices were more than firm with a 5.5% spike as metals prices took off; iron & steel scrap, +90.7% y/y; copper scrap, +47.2% y/y; nonferrous metal ores, +46.2% y/y. During the last thirty years "core" crude prices have been a fair indicator of industrial sector activity with a 51% correlation between the six month change in core crude prices and the change in factory sector industrial production.
· Intermediate goods prices jumped 0.9% higher as energy prices rose 4.3% (16.6% y/y). Core intermediate prices were tame and rose 0.3%.