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Economy in Brief

U.S. PPI Unexpectedly Remains Unchanged; Core Prices Are Well Behaved
by Tom Moeller  August 14, 2013

Upward pressure on wholesale prices eased last month. The producer price index for finished goods was unchanged during July (2.1% y/y) following an unrevised 0.8% June increase. The figure fell short of consensus expectations for a 0.3% rise. Prices excluding food & energy ticked 0.1% higher (1.2% y/y) after a 0.2% June rise. A 0.2% gain had been expected. 

A 0.2% decline (+4.0% y/y) in energy prices accounted for some of the weakened gain in the overall PPI last month. Gasoline prices slipped 0.8% (+3.4% y/y) while natural gas prices fell 3.9% (+10.2% y/y). These declines were offset by a 2.4% rise (4.5% y/y) in home heating oil prices and a 0.2% uptick (3.1% y/y) in electric power costs. Food prices also were well behaved last month and remained unchanged (2.8% y/y) following a 0.2% June increase. This moderate result was due to a 3.1% drop in beef & veal costs which also were off 3.1% y/y. Prices of fresh fruits & vegetables in addition declined 1.0% (+0.9% y/y). To the upside, fresh egg prices jumped 15.4% (11.1% y/y) while processed fruit & vegetable costs ticked up just 0.1% (1.2% y/y). 

Finished consumer goods prices also were unchanged (2.7% y/y) with the energy price decline. Prices excluding food & energy ticked up 0.1% (1.8% y/y) following June's 0.2% rise. Within the components, women's apparel prices rose 1.8% y/y while men's apparel prices were up 0.7% y/y. Furniture prices continued rising at a 1.5% y/y rate but household appliance prices fell 0.6% y/y. Passenger car prices fell 1.1% m/m and were off 1.9% y/y. Capital equipment prices edged up a steady 0.1% last month (0.6% y/y).

Intermediate goods prices also remained unchanged m/m (1.4% y/y) as core prices fell 0.3% (+1.0% y/y). That decline was offset by a 1.2% rise (3.9% y/y) in food prices while energy prices increased 0.3% (1.5% y/y). Crude goods prices jumped 1.2% last month (9.3% y/y) as energy prices surged 4.0% (21.6% y/y). That was countered by a 1.1% decline (+4.8% y/y) in food prices. Prices excluding food & energy slipped 0.3% (-1.9% y/y).

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 2012 2011 2010
Finished Goods 0.0 0.8 0.5 2.1 1.9 6.0 4.2
  Less Food & Energy 0.1 0.2 0.1 1.2 2.6 2.4 1.2
    Foods 0.0 0.2 0.6 2.8 2.6 6.3 3.9
    Energy -0.2 2.9 1.3 4.0 -0.2 15.5 13.5
Intermediate Goods 0.0 0.5 -0.0 1.4 0.5 9.0 6.4
  Less Food & Energy -0.3 0.1 -0.4 1.0 0.3 6.2 4.3
Crude Goods 1.2 0.0 2.2 9.3 -3.3 17.4 21.3
  Less Food & Energy -0.3 0.1 -2.3 -1.9 -5.2 18.5 32.5
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