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Economy in Brief

PPI Still Quite Firm in December
by Tom Moeller January 17, 2007

The producer price index for finished goods gained another 0.9% last month after the 2.0% surge during November. Led by a 2.5% rise in energy prices and a 1.7% increase in food prices, the gain nearly doubled Consensus expectations for a 0.5% rise.

The 0.2% core PPI rise calmed down after November's surprise 1.3% surge though that was double Consensus expectations for a 0.1% uptick.

The strength in finished energy goods prices was led by a 7.1% (1.8% y/y) surge in gasoline prices and a 4.0% (6.5% y/y) increase in fuel oil prices. Natural gas prices also increased 0.7% (-11.4% y/y).

Finished consumer goods prices less food & energy rose 0.2% (2.0% y/y) after the 1.3% November surge. Passenger car prices fell 0.2% (-0.5% y/y) but furniture prices rose 0.1% (2.1% y/y).

Capital equipment prices increased 0.2% (2.3% y/y) as light truck prices rose 0.7% (2.2% y/y) after the 13.7% November spike.

Intermediate goods prices increased another 0.5% but prices less food & energy fell again with a 0.1% downtick which reflected another decline (-0.4%, +11.6% y/y) in steel mill product prices.

The crude materials PPI surged again by 2.9% led by a strength in crude petroleum prices which has since reversed. The core crude materials PPI also was firm led by a 12.4% rebound in iron & steel scrap prices (2.8% y/y).

Producer Price Index December November Y/Y 2006 2005 2004
Finished Goods 0.9%  2.0%   1.2%  2.9%  4.9%  3.6% 
  Core 0.2% 1.3%  2.0% 1.4% 2.4% 1.5%
Intermediate Goods 0.5% 0.7% 2.8% 6.5%  8.0% 6.6%
  Core -0.1% -0.3% 4.7% 6.1%  5.5% 5.7%
Crude Goods  2.9%  15.7%  -2.4% 1.8% 14.6%  17.5%
  Core 1.0% 0.5%  16.8% 20.9% 4.8%  26.5%
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