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Economy in Brief

U.S. PPI Gain Reflects Energy Price Strength
by Tom Moeller  October 12, 2012

The producer price index for finished goods jumped again last month. The 1.1% increase (2.2% y/y) followed a 1.7% August rise and beat expectations for a 0.7% gain. Conversely, the unchanged level (2.3% y/y) of prices excluding food & energy surprised expectations for a 0.2% increase. Higher energy prices provided the lift to September's overall index with a 4.7% gain (-7.9% y/y). Gasoline prices jumped 9.8% (8.5% y/y) and home heating oil prices gained 3.1% (6.8% y/y). Food prices were relatively tame and rose 0.2% (1.8% y/y). That increase was led by a 5.4% y/y rise in prices for fresh fruits and a 9.4% y/y gain in meat prices. These strengths were offset by a 15.9% decline in vegetable prices.

Finished consumer goods prices jumped 1.6% (2.4% y/y). Excluding food & energy, consumer goods prices rose 0.2% (3.0% y/y). Within the components, men's apparel prices rose 3.2% y/y while women's clothing costs increased 0.2% y/y. Household appliance prices gained 5.1% since September of 2011, furniture prices rose 1.7% y/y and passenger car prices increased 1.6% y/y. Capital equipment prices slipped 0.1% last month (+1.7% y/y).

Intermediate goods prices jumped 1.5% (-0.1% y/y) as energy costs spiked 4.3% (0.7% y/y), about as they did in August. Also strong were food prices with a 2.0% rise (5.6% y/y). Core-intermediate prices rose 0.6% but still were off 1.2% y/y. Crude goods prices gained 2.8% (-2.6% y/y) last month bolstered by a 1.6% gain (-8.8% y/y) in prices less food & energy. Energy prices jumped 4.4% (-6.1% y/y) while food prices increased another 1.6% (5.2% y/y) due to drought conditions in the Midwest. Prices less food & energy gained 1.6% and were down 8.8% 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(%) Sep Aug Jul Sep Y/Y 2011 2010 2009
Finished Goods 1.1 1.7 0.3 2.2 6.0 4.2 -2.5
 Less Food & Energy 0.0 0.2 0.4 2.3 2.4 1.2 2.6
  Foods 0.2 0.9 0.5 1.8 6.3 3.9 -1.4
  Energy 4.7 6.4 -0.4 2.1 15.7 13.6 -17.6
Intermediate Goods 1.5 1.1 -0.9 -0.1 9.1 6.4 -8.4
 Less Food & Energy 0.6 -0.2 -0.9 -1.1 6.2 4.3 -4.2
Crude Goods 2.8 5.8 1.8 -2.6 17.4 21.4 -30.3
 Less Food & Energy 1.6 2.2 -1.1 -8.8 18.5 32.5 -23.3
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