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Economy in Brief

U.S. PPI Gain Driven By Core Price Increase
by Tom Moeller  August 14, 2012

The producer price index for finished goods rose 0.3% last month after a 0.1% June uptick. The gain beat expectations for a 0.2% rise. Excluding food & energy, prices gained 0.4% (2.6% y/y), the strongest rise since January. A 0.2% rise was expected.A second consecutive 0.5% increase (2.2% y/y) in finished food prices provided strength to last month's PPI. Offsetting the increase was a 0.4% decline (-6.1% y/y) in energy prices, the shortfall due to a 3.1% drop (-7.9% y/y) in gasoline prices. This was offset by a 1.3% gain (0.0% y/y) in electric power costs.

Finished consumer goods prices rose 0.2% (-0.0% y/y). Excluding food & energy, consumer goods prices rose 0.6% (3.2% y/y). Within the components, men's apparel prices rose 4.5% y/y while women's clothing costs slipped 0.1% y/y. Household appliance prices rose 5.0% since July of 2011, furniture prices gained 2.9% y/y and passenger car prices increased 1.5% y/y. Capital equipment prices gained just 0.2% last month and by 1.8% year-to-year.

Intermediate goods prices fell 0.9% (-2.6% y/y). Energy costs declined 1.6% (-7.6% y/y) last month but food prices increased 1.4% (3.2% y/y). Core-intermediate prices fell 0.9% and were off 1.5% y/y. Crude materials prices gained 1.8% last month and were down 9.8% year-to-year. Energy prices inched up 0.6% (-19.1% y/y) while food prices jumped 5.2% (1.6% y/y) due to drought conditions in the Midwest. Prices less food & energy fell 1.1% and were down 11.5% over the prior twelve months.

The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

Producer Price Index(%) Jul Jun May Jul Y/Y 2011 2010 2009
Finished Goods 0.3 0.1 -1.0 0.5 6.0 4.2 -2.5
 Less Food & Energy 0.4 0.2 0.2 2.6 2.4 1.2 2.6
  Food 0.5 0.5 -0.6 2.2 6.3 3.9 -1.4
  Energy -0.4 -0.9 -4.3 -6.1 15.7 13.6 -17.6
Intermediate Goods -0.9 -0.5 -0.8 -2.6 9.1 6.4 -8.4
 Less Food & Energy -0.9 -0.7 -0.2 -1.5 6.2 4.3 -4.2
Crude Materials 1.8 -3.6 -3.2 -9.8 17.4 21.4 -30.3
 Less Food & Energy -1.1 -4.0 -1.3 -11.5 18.5 32.5 -23.3
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