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Economy in Brief

U.S. PPI Total Surged, Core Firm
by Tom Moeller December 13, 2007

Finished producer prices surged 3.2% last month after little change during October. A 1.5% rise had been expected. Core finished goods producer prices rose a firm 0.4%, the strongest gain since this past February.

Energy prices increased 14.1% (25.7% y/y) led by a 34.8% (50.9% y/y) pop in the price of gasoline. Home heating oil prices also surged by 31.5% (36.0% y/y) but natural gas prices fell 5.2% (+1.0% y/y).

The firm gain in the core PPI almost wholly reflected a 0.6% rise in passenger car prices and a 2.3% surge in light truck prices.

Capital equipment prices rose 0.3% (1.3% y/y on the strength of light truck prices.

Food prices were unchanged (7.2% y/y) after 1.0%+ gains during the prior two months.

Intermediate goods prices surged 3.7% on the strength of higher energy prices and a 1.2% (16.3% y/y) surge in food prices. Excluding food & energy prices were also firm and rose 1.0% (3.3% y/y).

The crude materials PPI surged 8.7% led higher by a 17.0% (23.5% y/y) jump in energy prices. The core crude materials PPI fell 0.5%.

A Comparison of Measures of Core Inflation from the Federal Reserve Bank of New York can be found here.

Producer Price Index November October Y/Y 2006 2005 2004
Finished Goods 3.2% 0.1%    7.7%  2.9%  4.9%  3.6% 
  Core 0.4% 0.0%  1.9% 1.4% 2.4% 1.5%
Intermediate Goods 3.7% 0.1% 8.6% 6.4%  8.0% 6.6%
  Core 1.0% 0.1% 3.3% 6.0%  5.5% 5.7%
Crude Goods 8.7%  2.4%   22.2% 1.4% 14.6%  17.5%
  Core -0.5% 1.4%  18.9% 20.9% 4.9%  26.5%
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