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Economy in Brief

U.S. PPI Falls With Lower Energy Costs; Core Prices Strengthen
by Tom Moeller  July 14, 2011

The U.S. producer price index for finished goods fell 0.4% last month, pulled down by a 2.8% drop in energy. The figure compared to Consensus expectations for a 0.2% decline. The energy price decline reflected an 8.8% drop (NSA, +43.0% y/y) in gasoline and a 2.1% decline (+45.9% y/y) in home heating oil. Electric power costs rose just 0.9% (0.4% y/y). Food prices rose a strengthened 0.6% (7.3% y/y). Excluding both energy & food, prices also rose a strengthened 0.3%. The y/y gain of 2.3% was the strongest in nearly two years.

Finished consumer goods prices fell 0.6% (+8.9% y/y). Core prices, however, rose a firm 0.4% (2.9% y/y). Furniture prices rose a firm 1.9% y/y and appliance prices rose 0.8% y/y. Men's apparel prices increased 3.2% y/y and women's clothing prices rose 1.3%. Capital equipment prices increased 0.3% last month and by an accelerated 1.6% y/y after a 0.4% uptick during 2010.

Intermediate goods prices were unchanged as energy prices declined 0.8% (+23.3% y/y). That decline was partially offset by a 0.4% increase in food prices (14.5% y/y). Core-intermediate prices rose a lessened 0.3% (7.2% y/y). Crude materials prices slipped another 0.6%. However, prices less food & energy jumped 1.1%. Strength in copper and iron & steel scrap prices continued. Crude energy prices fell 4.1% (+18.6% y/y) but food prices increased 2.1% (32.9% 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.

Producer Price Index (%) Jun May Apr Jun Y/Y 2010 2009 2008
Finished Goods -0.4 0.2 0.8 7.0 4.2 -2.5 6.4
    Energy -2.8 1.5 2.5 19.9 13.8 -17.7 14.1
    Food 0.6 -1.4 0.3 7.3 3.9 -1.4 6.8
  Less Food & Energy 0.3 0.2 0.3 2.3 1.2 2.5 3.4
Intermediate Goods 0.0 0.9 1.3 11.0 6.4 -8.4 10.3
  Less Food & Energy 0.3 0.9 1.1 7.2 4.3 -4.2 7.4
Crude Materials -0.6 -4.1 4.0 25.5 21.4 -30.3 21.5
  Less Food & Energy 1.1 -0.9 2.6 25.1 32.6 -23.4 14.7
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