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Economy in Brief

U.S. PPI Is Unchanged But Core Remains Firm
by Tom Moeller  April 12, 2012

The producer price index for finished goods was unchanged during March following an unrevised 0.4% February gain, below expectations for a 0.3% increase. Inflation pressures, however, were still evident as core pricing power increased. The PPI less food & energy rose 0.3% vs. 0.2% in February. That was enough to leave the y/y gain at 2.9% versus a 2.4% rise during all of last year. Expectations had been for a 0.2% March rise.

A 1.0% decline (2.7% y/y) in energy prices accounted for the unchanged PPI. Gasoline prices fell 2.0% (+7.1% y/y) while home heating oil costs dropped 1.2% (+6.9% y/y). These declines were partially offset by a 0.7% rise (-8.8% y/y) in residential gas prices. Also rising were food prices. Their 0.2% increase (2.3% y/y) reflected a 12.8% rise (-29.7% y/y) in vegetable prices; beef & veal costs dropped 2.4% (+5.7% y/y).

Finished consumer goods prices slipped 0.1% (+2.9% y/y) after a 0.5% February rise. Less food & energy, consumer goods prices rose 0.3% (3.5% y/y). Within the components, men's apparel prices rose 1.5% (8.0% y/y) while women's clothing costs slipped 0.5% (+1.0% y/y). Household appliance prices rose 0.9%, 5.5% since March of 2011. Passenger car prices rose an increased 0.8% (1.5% y/y). Capital equipment prices gained 0.2% last month and by a steady 2.2% since last March.

Intermediate goods prices jumped another 0.7%. The increase left the y/y rise at a decelerated 2.9% versus last year's 9.1%. Energy prices rose 1.3% last month (4.2% y/y) and food prices rose 0.6% (3.0% y/y) following five months of decline. Core-intermediate prices posted a 0.6% gain (2.4% y/y). Crude materials prices declined 2.5% last month and were unchanged during the last twelve. Energy prices declined 9.2% (-6.0% y/y) while food prices rose 2.8% (5.5% y/y). Prices less food & energy increased 1.1% and were up 0.4% 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.

The Economic Outlook and Monetary Policy is yesterday's speech by Fed Vice Chair Janet L. Yellen and it can be found here .

Producer Price Index (%) Mar Feb Jan Mar Y/Y 2011 2010 2009
Finished Goods 0.0 0.4 0.1 2.8 6.0 4.2 -2.5
 Less Food & Energy 0.3 0.2 0.4 2.9 2.4 1.2 2.6
  Food 0.2 -0.1 -0.3 2.3 6.3 3.9 -1.4
  Energy -1.0 1.3 -0.5 2.7 15.7 13.6 -17.6
Intermediate Goods 0.7 0.7 -0.4 2.9 9.1 6.4 -8.4
 Less Food & Energy 0.6 1.0 -0.1 2.4 6.2 4.3 -4.2
Crude Materials -2.5 0.4 1.5 0.0 17.4 21.4 -30.3
 Less Food & Energy 1.1 -0.3 0.6 0.4 18.7 32.5 -23.3
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