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Economy in Brief

U.S. Producer Prices Rebound With Food Costs
by Tom Moeller  December 15, 2011

The November producer price index for finished goods rebounded 0.3% following an unrevised 0.3% October decline. The figure compared to Consensus expectations for a 0.2% increase, according to the Action Economics survey. The increase left the y/y change at an elevated 5.9%. Core pricing power was  moderate as indicated by a 0.1% uptick in the November PPI less food & energy. A 0.2% increase had been expected. Nevertheless, the latest rise left the twelve-month increase at 2.9%, more-than double last year's rise.

Higher food prices accounted for most of the rise in last month's PPI as they jumped 1.0% (7.7% y/y). Prices for fresh & dried vegetables rose by more than one-third y/y while beef & veal prices rose 16.7% y/y. Pasta product prices rose 18.6% y/y and dairy prices also posted a firm 8.7% y/y gain. Energy prices ticked up just 0.1% as gasoline prices slipped 0.1% (+21.5% y/y), electric power costs slipped 0.5% (2.7% y/y) and natural gas prices fell 2.0% (-0.5% y/y). These declines offset a 9.4% (31.0% y/y) rise in home heating oil costs.

Finished consumer goods prices rose 0.3% (7.1% y/y) with higher food costs. Less food & energy, consumer goods prices rose 0.2% (3.5% y/y). Within the components, men's apparel prices were strong posting a 7.7% y/y increase after being little-changed last year. Household furniture prices rose 2.8% y/y, up from 0.3% last year. Appliance prices rose 2.9% y/y after a 0.6% fall in 2010 and women's apparel prices rose 1.8% y/y 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 equipment prices rose 0.1% last month and the 2.2% y/y increase built on last year's 0.4% rise.

Intermediate goods prices rose 0.2% (7.8% y/y) as energy prices rose 1.9% (15.4% y/y) and food prices rose 0.6% (8.3% y/y). Core-intermediate prices fell 0.4% (+5.2% y/y). Crude materials prices rose 3.8% (15.3% y/y) as energy prices jumped 10.5% (19.3% y/y) and food prices nudged up 0.5% (16.0% y/y). Continuing lower were prices less food & energy, off 2.5% m/m and up a lessened 6.5% 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 (%) Nov Oct Sep Nov Y/Y 2010 2009 2008
Finished Goods 0.3 -0.3 0.8 5.9 4.2 -2.5 6.4
  Less Food & Energy 0.1 0.0 0.2 2.9 1.2 2.5 3.4
   Food 1.0 0.1 0.6 7.7 3.9 -1.4 6.8
   Energy 0.1 -1.4 2.3 12.2 13.7 -17.7 14.1
Intermediate Goods 0.2 -1.1 0.6 7.8 6.4 -8.4 10.3
  Less Food & Energy -0.4 -0.6 0.2 5.2 4.3 -4.2 7.4
Crude Materials 3.8 -2.5 2.8 15.3 21.4 -30.3 21.5
  Less Food & Energy -2.5 -4.3 1.0 6.5 32.6 -23.4 14.7
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