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Economy in Brief

U.S. PPI Increase Moderates
by Tom Moeller  April 14, 2011

The U.S. Producer Price Index for finished goods increased 0.7% last month after the 1.6% jump during February. The March increase was less than the 1.0% Consensus expectation. Less food & energy, however, pricing pressures picked up slightly. The 0.3% gain in the PPI less food & energy was up from 0.2% in February. It exceeded Consensus expectations for a 0.2% rise and raised the y/y gain to 2.0%, its highest since summer 2009.

Energy prices again were strong and posted a 2.6% increase (17.4% y/y) as gasoline prices increased a not seasonally adjusted 14.2% (31.2% y/y). Since the late-2008 low, gasoline prices have more-than-doubled. Home heating oil prices also were strong, posting a 8.4% (39.2% y/y) increase. Natural gas prices fell 2.7% (-2.9% y/y) while electricity prices slipped 0.1% (+3.3% y/y). Food prices backpedaled 0.2% (+4.5% y/y) after the 3.9% February jump. Lower prices for fresh fruit & vegetables offset strength in meat prices.

Finished consumer goods prices rose 0.8% (7.4% y/y) with the gain in food & energy costs. Core prices rose 0.3% (2.6% y/y). Furniture prices rose 2.0% y/y but passenger car prices slipped 0.2%. Men's apparel prices increased 3.5% y/y but women's clothing prices rose just 0.4%. Capital goods prices increased 0.3% last month and by an accelerated 1.0% y/y.

Intermediate goods prices jumped another 1.5% as energy prices increased 2.9% (18.6% y/y). Food prices also strengthened by 2.2% (12.8% y/y). Core-intermediate prices remained firm and rose another 0.9% (5.6% y/y). Crude materials prices slipped 0.5% but the 16.5% y/y gain was continuing testament to the strength of the industrial sector. Less food & energy prices reversed a 2.3% February increase and the y/y gain was 19.2%. Metal prices remained strong. Crude energy prices slipped 0.5% (+6.6% y/y) while food prices rose 0.3% (26.2% y/y).

The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectation figure is available in the AS1REPNA database.

The latest Beige Book covering regional economic conditions from the Federal Reserve Board can be found here.

Producer Price Index (%) Mar Feb Jan Mar Y/Y 2010 2009 2008
Finished Goods 0.7 1.6 0.8 5.7 4.2 -2.5 6.4
    Energy 2.6 3.3 1.8 17.4 13.8 -17.7 14.1
    Food -0.2 3.9 0.3 4.5 3.9 -1.4 6.8
  Less Food & Energy 0.3 0.2 0.5 2.0 1.2 2.5 3.4
Intermediate Goods 1.5 2.0 1.1 8.9 6.4 -8.4 10.3
  Less Food & Energy 0.9 1.1 1.0 5.6 4.3 -4.2 7.4
Crude Materials -0.5 3.4 3.3 16.5 21.4 -30.3 21.5
  Less Food & Energy -2.3 2.3 4.0 19.2 32.6 -23.4 14.7
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