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Economy in Brief

U.S. Producer Prices Tick Higher as Food Prices Rebound
by Tom Moeller  August 15, 2014

The overall Final Demand Producer Price Index rose 0.1% during July (1.7% y/y) following an unrevised 0.4% June increase. The gain matched expectations in the Action Economics Forecast Survey. Prices excluding food & energy improved a stable 0.2% last month (1.6% y/y), also as expected.

The total index was led higher by finished food prices which jumped 0.4% (3.7% y/y), reversing two months of 0.2% decline. Beef & veal prices soared 9.2% (26.5% y/y). A 0.6% drop in energy prices (+2.5% y/y) offset most of this increase. They were led lower by a 2.1% decline (+0.4% y/y) in gasoline prices. Final demand prices for goods (35% of the total index) remained unchanged (2.0% y/y) after a 0.5% jump. Passenger car prices declined 0.3% (+1.0% y/y). Private capital equipment prices nudged 0.1% higher (1.3% y/y) for the third consecutive month.

Services prices (63% of the total index) ticked 0.1% higher (1.6% y/y) after a 0.3% increase. Prices for transportation of passengers gained 0.3% (2.9% y/y) following two months of 0.8% increase. Prices for transportation and warehousing of goods for final demand gained 0.6% (2.7% y/y) after a 0.2% rise.

Construction prices for final demand jumped 0.5% (3.3% y/y) after two months of 0.1% uptick.

Intermediate demand prices of processed goods notched 0.1% higher (1.6% y/y) after a 0.4% jump.

Measured using the old formula, which is being phased out as the headline series, producer prices ticked 0.1% higher (2.9% y/y) after a 0.7% June Jump. Food costs surged 1.1% (5.9% y/y) while energy prices declined 0.7% (+2.9% y/y). Prices excluding food & energy nudged 0.1% higher (1.9% y/y).

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

Producer Price Index (%) Jul Jun May Jul Y/Y 2013 2012 2011
Final Demand 0.1 0.4 -0.2 1.7 1.3 1.9 3.9
  Excluding Food & Energy 0.2 0.2 -0.1 1.6 1.5 1.9 --
     Goods 0.0 0.5 -0.2 2.1 0.8 1.7 6.8
       Foods 0.4 -0.2 -0.2 3.7 1.7 3.0 8.5
       Energy -0.6 2.1 -0.2 2.5 -0.8 0.2 17.5
     Goods Excluding Food & Energy 0.2 0.1 0.0 1.5 1.1 1.8 3.4
   Services 0.1 0.3 -0.2 1.6 1.6 1.9 2.1
   Construction  0.5 0.1 0.1 3.3 1.8 2.9 2.2
Intermediate Demand - Processed Goods 0.1 0.4 -0.1 1.6 0.0 0.5 8.9
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