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Economy in Brief

U.S. PPI Picks Up; Core Moderates
by Tom Moeller  March 15, 2012

The producer price index for finished goods rose 0.4% during February, the strongest increase since last September. Consensus expectations had been for a 0.5% rise, according to the Action Economics survey. Core pricing power eased. The PPI less food & energy rose 0.2%, half the prior month's gain, and matched expectations.

Higher energy prices were behind the strength in last month's overall PPI increase. The 1.3% (5.8% y/y) gain owed to a 4.3% rise (13.9% y/y) in gasoline prices. Home heating oil costs also were strong posting a 5.3% jump (10.6% y/y). These gains were countered by a 2.8% slide (-9.8% y/y) in residential gas prices. Another decline in food prices countered energy cost strength with a 0.1% dip (+1.6% y/y), the third decline in as many months. Egg prices fell 4.4% (-11.2% y/y) while beef & veal prices dropped 1.2% (+9.4% y/y).

Finished consumer goods prices rose 0.5% (3.7% y/y) versus January. Less food & energy, consumer goods prices rose 0.2% (3.5% y/y). Within the components, men's apparel prices rose 6.3% y/y while women's clothing costs increased 1.7% y/y. Household furniture prices gained 2.7% y/y while appliance prices rose 4.7% during the last twelve months. Passenger car prices rose a moderate 1.2% y/y. Capital equipment prices ticked up 0.1% last month and by 2.2% since last February.

Intermediate goods prices jumped 0.7% were up a firm 3.4% y/y. Energy prices rose 0.3% last month (5.5% y/y) and food prices slipped 0.1% (+4.5% y/y), down for the fourth month in the last five. Core-intermediate prices jumped 1.0% (2.5% y/y). Crude materials prices increased 0.4% last month and 1.6% during the last twelve. Energy prices gained 0.3% (0.8% y/y) while food prices rose 0.6% (3.7% y/y). Prices less food & energy fell 0.3% and were down 2.5% versus last year.

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 (%) Feb Jan Dec Feb Y/Y 2011 2010 2009
Finished Goods 0.4 0.1 -0.1 3.4 6.0 4.2 -2.5
 Less Food & Energy 0.2 0.4 0.3 2.9 2.4 1.2 2.6
  Food -0.1 -0.3 -0.9 1.6 6.3 3.9 -1.4
  Energy 1.3 -0.5 -0.4 5.8 15.7 13.6 -17.6
Intermediate Goods 0.7 -0.4 -0.2 3.4 9.1 6.4 -8.4
 Less Food & Energy 1.0 -0.1 -0.5 2.5 6.2 4.3 -4.2
Crude Materials 0.4 1.5 -1.5 1.6 17.4 21.4 -30.3
 Less Food & Energy -0.3 0.6 -0.1 -2.5 18.7 32.5 -23.3
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