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Economy in Brief

U.S. Producer Prices Decline With Energy
by Tom Moeller  November 15, 2011

The October producer price index for finished goods fell 0.3% following an unrevised 0.8% September jump. The figure compared to Consensus expectations for a 0.1% slip, according to the Action Economics survey. The increase left the y/y change at an elevated 6.1%. Core pricing power also was under control last month. Less food & energy, producer prices were unchanged after a 0.2% gain in September. A 0.1% increase had been expected. The latest rise left the twelve-month increase at 2.8%. more-than double last year's rise.

Energy prices fell 1.4% (+13.8% y/y) and reversed the September increase. Strength in gasoline (+26.2% y/y) and home heating oil (+26.1% y/y) prices eased while moderation in electric power (3.0 y/y) and natural gas (-1.4%) costs continued. Earlier strength in food prices eased as they posted a 0.1% uptick (7.5% y/y). Prices for eggs rose by more than one-third y/y while beef & veal prices rose 13.8% y/y. Dairy prices also posted a firm 8.6% y/y gain and fresh fruit prices were up 8.2% as well.

Finished consumer goods prices fell 0.4% (+7.5% y/y) with lower energy costs. Less food & energy, prices ticked up 0.1% (3.4% y/y) though that y/y rise was the strongest since mid-2009. Within the components, men's apparel prices were strong posting a 7.2% y/y increase after being little-changed last year. Household furniture prices rose 2.6% y/y, up from 0.3% last year. Appliance prices rose 1.9% y/y after a 0.6% fall in 2010 and women's apparel prices rose 1.3% after last year's 0.5% dip. Passenger car prices rose 1.8% y/y after last year's 1.4% y/y decline and tobacco prices rose a stable and strong 6.6% y/y. Capital goods prices jumped 1.0% last month and the 2.0% y/y increase built on last year's 0.4% y/y gain.

Intermediate goods prices fell 1.1% (+8.4% y/y) as energy prices dropped 2.6% (+14.9% y/y) and food prices were off 1.5% (+10.7% y/y). Core-intermediate prices fell 0.6% (+6.3% y/y). Crude materials prices dropped 2.5% (+12.6% y/y) as energy prices fell 2.2% (+9.8% y/y) and food prices were off 1.8% (+15.9% y/y). Also down were prices less food & energy. They fell 4.3% and were up a lessened 11.8% y/y. Raw cotton prices were off sharply (+17.1% y/y) and most metals prices also fell, reversing recent strength.

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 (%) Oct Sep Aug Oct Y/Y 2010 2009 2008
Finished Goods -0.3 0.8 0.0 6.1 4.2 -2.5 6.4
  Less Food & Energy 0.0 0.2 0.1 2.8 1.2 2.5 3.4
   Food 0.1 0.6 1.1 7.5 3.9 -1.4 6.8
   Energy -1.4 2.3 -1.0 13.8 13.7 -17.7 14.1
Intermediate Goods -1.1 0.6 -0.5 8.4 6.4 -8.4 10.3
  Less Food & Energy -0.6 0.2 -0.1 6.3 4.3 -4.2 7.4
Crude Materials -2.5 2.8 0.2 12.6 21.4 -30.3 21.5
  Less Food & Energy -4.3 1.0 1.6 11.8 32.6 -23.4 14.7
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