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Economy in Brief

U.S. Producer Price Index Posts Unexpectedly Firm Increase
by Tom Moeller  July 15, 2015

The overall Final Demand Producer Price Index increased 0.4% during June (-0.7% y/y) following an unrevised 0.5% May rise. A 0.2% gain was expected in the Action Economics Forecast Survey. Prices excluding food & energy also beat expectations and rose 0.3% (0.8% y/y) following a 0.1% uptick. A 0.1% improvement had been expected.

Final demand goods prices (35% of the total index) gained 0.7% (-3.7% y/y) on the heels of a 1.3% jump. The rise was led by a 2.4% increase in energy prices (-17.9% y/y) following a record 5.9% spurt in May. Natural gas prices surged 3.1% (-13.2% y/y), the first increase this year. Electric power costs jumped 1.3% (2.0% y/y) after four straight months of decline. Gasoline prices rose 4.3% (-31.3% y/y) following a 17.0% jump while home heating oil prices eased 0.6% (-31.0% y/y) after an 11.5% rise. Food prices increased 0.6% (-3.0% y/y) after a 0.8% jump. It was led by a two-thirds surge in egg prices which have nearly doubled y/y and a 1.2% rise in dairy product costs (-12.2% y/y). These gains were offset by a 0.7% decline in beef & veal prices (+9.5% y/y) and pasta product prices eased 0.5% (+7.5% y/y).

Final demand goods prices excluding food & energy jumped 0.4% (0.6% y/y), the largest increase since January 2014. It was led by a 1.1% increase in nondurable goods prices (4.1% y/y). Light truck prices gained 0.2% (3.8% y/y) but passenger car prices eased 0.2% (+1.1% y/y). Furniture prices slipped 0.1% (+1.6% y/y).

Final demand services costs (63% of the total index) increased 0.3% (0.8% y/y), the largest increase in six months. Transportation of passengers prices improved 0.5% (-4.4% y/y) and reversed the prior month's decline. Trade services costs rose 0.2% (1.3% y/y) following a 0.6% jump.

Final demand construction prices (2.0% of the index) nudged 0.1% higher (1.8% y/y) for the fourth month this year.

Prices for intermediate demand posted a second month of strength with a 0.7% rise (-6.3% 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.

Semiannual Monetary Policy Report to the Congress by Federal Reserve Board Chair Janet L. Yellen is available here.

Producer Price Index (SA, %) Jun May Apr Jun Y/Y 2014 2013 2012
Final Demand 0.4 0.5 -0.4 -0.7 1.6 1.3 1.9
  Excluding Food & Energy 0.3 0.1 -0.2 0.8 1.7 1.5 1.9
     Goods 0.7 1.3 -0.7 -3.7 1.3 0.8 1.7
       Foods 0.6 0.8 -0.9 -3.0 3.2 1.7 3.0
       Energy 2.4 5.9 -2.9 -17.9 -1.0 -0.8 0.2
     Goods Excluding Food & Energy 0.4 0.2 -0.1 0.6 1.5 1.1 1.8
   Services 0.3 0.0 -0.1 0.8 1.8 1.6 1.9
   Construction 0.1 0.1 0.1 1.8 3.0 1.8 2.9
Intermediate Demand - Processed Goods 0.7 1.0 -1.1 -6.3 0.6 0.0 0.5
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