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Economy in Brief

U.S. Producer Price Index Rebounds
by Tom Moeller  January 15, 2014

Price inflation recovered at the end of last year. The Producer Price Index for finished goods increased 0.4% (1.2% y/y) following unrevised declines of 0.1% and 0.2% during the prior two months. The latest gain matched expectations in the Action Economics survey. Prices excluding food & energy increased 0.3% in December (1.4% y/y) following gains of 0.1% and 0.2% during the two prior months. A 0.1% uptick was expected.

A 1.6% increase (1.3% y/y) in energy prices was driven by a 6.4% rebound (3.9% y/y) in home heating oil prices. Gasoline prices recovered 2.2% (-1.0% y/y) following three consecutive months of decline. Residential electric power costs again increased 0.2% (2.1% y/y) while natural gas prices also improved by 0.2% (3.9% y/y).

Food prices fell 0.6% (+0.6% y/y). Beef & veal prices fell 1.8% (-1.7% y/y) and pork prices were off 3.5% (+4.1% y/y). These declines were countered by a 9.9% rise (17.7% y/y) in fresh egg costs though processed fruit & vegetable prices were unchanged (0.9% y/y).

Finished consumer goods prices excluding food & energy jumped 0.4% (1.8% y/y) following four consecutive months of being unchanged. Consumer durable goods prices ticked up 0.1% for a third straight month (0.7% y/y) as passenger car prices improved by 0.2% (-0.5% y/y). Household appliance prices gained 0.5% (-0.9% y/y). Core consumer nondurable goods prices increased 0.7% (2.6% y/y). Capital equipment prices nudged up 0.1% for a third straight month (1.0% y/y).

Intermediate goods prices rebounded 0.6% but were unchanged y/y. Energy costs jumped 1.9% (-1.3 y/y) while intermediate food prices improved by 0.4% (-3.2% y/y). Prices excluding food & energy again improved 0.2% (0.8% y/y). Crude goods prices jumped 2.4% (-2.2% y/y) led by a 6.2% recovery (4.4% y/y) in energy prices. Crude food prices again fell 0.3% (-6.4% y/y). Crude goods prices excluding food & energy improved 0.6% (-5.9% 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 (%) Dec Nov Oct Dec Y/Y 2013 2012 2011
Finished Goods 0.4 -0.1 -0.2 1.2 1.2 1.9 6.0
  Less Food & Energy 0.3 0.1 0.2 1.4 1.5 2.6 2.4
    Foods -0.6 0.0 0.8 0.6 2.2 2.6 6.3
    Energy 1.6 -0.4 1.6 1.3 -0.2 -0.3 15.7
Intermediate Goods 0.6 -0.5 -0.4 0.0 0.0 0.5 8.9
  Less Food & Energy 0.0 0.0 -0.2 0.8 0.6 0.3 6.2
Crude Goods 2.4 -2.6 -0.9 -2.2 2.1 -3.2 17.5
  Less Food & Energy 0.6 1.4 -0.5 -5.9 -5.0 -5.3 18.6
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