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Economy in Brief

Finished Producer Prices Tame, But Crude Prices Soar
by Tom Moeller August 13, 2004

The July PPI for finished goods rose a tame 0.1% versus Consensus expectations for a 0.3% rise.The "core" PPI also was well behaved, rising an expected 0.1%.

Finished energy prices bounced up 2.3% (11.3% y/y) after the 1.6% June decline. Offsetting that gain was a 1.6% (+4.9% y/y) decline in food prices.

Prices of finished consumer goods less food & energy rose 0.1% (1.8% y/y) for the second month reflecting flat consumer durable prices and a 0.2% gain in core non-durable prices.

Finished capital goods prices rose 0.1% (1.6% y/y).

The fireworks in the PPI report was an 8.6% increase in core crude goods prices, a record gain which reflected a 32.2% (NSA) rise in iron & steel scrap prices. Other metals prices also were quite strong.

Intermediate goods prices were strong as well with a 0.8% gain. Core intermediate prices rose the same 0.5% (6.4% y/y) as in June, last month reflecting higher paperboard and box prices.

"Will Oil Prices Choke Growth?" from the Federal Reserve Bank of St. Louis can be found here.

Producer Price Index July June Y/Y 2003 2002 2001
Finished Goods 0.1% -0.3% 4.0% 3.2% -1.3% 2.0%
  Core 0.1% 0.2% 1.8% 0.2% 0.1% 1.4%
Intermediate Goods 0.8% 0.5% 7.7% 4.7% -1.5% 0.4%
  Core 0.5% 0.5% 6.4% 2.0% -0.5% -0.1%
Crude Goods -0.2% 1.6% 22.1% 25.1% -10.6% 0.3%
  Core 8.6% -0.5% 28.8% 12.4% 3.8% -10.0%
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