Recent Updates

  • Japan: Wage Indexes, Hours Worked (May), TSE Tokyo PRO Market, Machine Tool Orders (Jun)
  • Korea: First 20 Days of Trade, Tourist Arrivals (Jul), Foreign Investment (Q2), Loans to Households and Enterprises (May); Hong Kong: Personal Bankruptcy Petitions (Jun); Pakistan: Credit by Borrowers (Jun); China: Fixed Assets Investment (Jun), GDP, Construction Output (Q2)
  • US: GDP by Industry (Q1)
  • more updates...

Economy in Brief

U.S. PPI Surges While Downstream Pressures Build
by Tom Moeller  March 16, 2011

The U.S. Producer Price Index for finished goods jumped 1.6% last month and doubled its January increase. The latest increase was  significantly greater than Consensus expectations for a 0.7% gain. Less food & energy, pricing pressures eased. The 0.2% increase was less than half the January increase and matched Consensus expectations.

Energy prices again were strong and posted a 3.3% increase (15.3% y/y) as gasoline prices increased a not seasonally adjusted 2.4% (26.3% y/y). Since the late-2008 low, gasoline prices have more-than-doubled. Home heating oil prices also were strong, posting a 7.0% (37.4% y/y) increase. Natural gas prices rose a lesser 2.3% (-2.3% y/y) and electricity prices rose 1.1% (4.6% y/y). Food prices also spiked by 3.9% (7.4% y/y). The strength owed to a nearly one-half surge in fresh fruit & vegetable costs (73.9% y/y) and a 7.6% jump (-3.9% y/y) in egg prices. 

Finished consumer goods prices jumped 2.1% (7.5% y/y) with the gain in food & energy. Core prices rose 0.3% (2.6% y/y). Furniture prices rose 1.7% y/y but passenger car prices fell 1.7%. Men's apparel prices increased 3.1% y/y while women's clothing prices rose 0.3%. Capital goods prices inched up 0.1% last month and by 0.8% y/y.

Intermediate goods prices jumped 2.0% as energy prices surged 4.3% (15.7% y/y). Food prices also strengthened by 2.6% (9.9% y/y). Core-intermediate prices remained firm and rose another 1.1% (5.4% y/y). The 3.4% m/m increase in crude goods prices also roughly matched the January gain as energy prices rose 0.9% (0.0% y/y) and food prices increased 6.7% (9.1% y/y). Continuing to reflect strength in the industrial sector, core crude prices posted a 2.3% increase (28.4% y/y) paced by higher iron & steel scrap (32.3% y/y), aluminum base scrap (27.6% y/y) and copper scrap (25.8% y/y) prices.

The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR.

Inflation Dynamics and the New Keynesian Phillips Curve from the Federal Reserve Bank of Philadelphia can be found here.

Producer Price Index (%) Feb Jan Dec Feb Y/Y 2010 2009 2008
Finished Goods 1.6 0.8 0.9 5.8 4.2 -2.5 6.4
  Energy 3.3 1.8 2.8 15.3 13.8 -17.7 14.1
  Food 3.9 0.3 0.8 7.4 3.9 -1.4 6.8
  Less Food & Energy 0.2 0.5 0.2 1.9 1.2 2.5 3.4
Intermediate Goods 2.0 1.1 0.9 7.9 6.4 -8.4 10.3
  Less Food & Energy 1.1 1.0 0.4 5.4 4.3 -4.2 7.4
Crude Materials 3.4 3.3 6.5 16.0 21.4 -30.3 21.5
  Less Food & Energy 2.3 4.0 3.5 28.4 32.6 -23.4 14.7
close
large image