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Economy in Brief

U.S. Producer Price Inflation Eases but Core Prices Firm
by Tom Moeller  August 14, 2015

The overall Final Demand Producer Price Index increased 0.2% during July (-0.8% y/y) following an unrevised 0.4% June rise. A 0.1% uptick was expected in the Action Economics Forecast Survey. Prices excluding food & energy also were stronger than expectations, rising 0.3% (0.6% y/y) for a second straight month. A 0.1% uptick had been expected.

Final demand goods prices (35% of the total index) eased 0.1% (-3.7% y/y) after a 0.7% rise. The decline was paced by a 0.6% decline in energy prices (-17.9% y/y) which followed two straight months of notably strong gains. Home heating oil costs retreated 9.5% (-36.7% y/y) after a 0.6% dip. Natural gas prices backpedaled 2.4% (-14.4% y/y) following a 3.1% jump. To the upside, gasoline prices gained 1.5% (-28.1% y/y) following strength earlier this year. Electric power costs edged up 0.1% (1.9% y/y) after a 1.3% jump. Food prices eased 0.1% (-2.8% y/y) after two months of strong increase. Egg prices backed off by roughly one quarter but still were up 46.2% y/y. Dairy product costs eased 0.2% (-12.3% y/y). Beef & veal prices remained unchanged (2.1% y/y) and pasta product prices increased 1.3% (8.8% y/y).

Final demand goods prices excluding food & energy remained unchanged (0.5% y/y) after two months of increase. Nondurable goods prices eased 0.2% (+3.8% y/y) after a 1.1% jump. Durable consumer goods prices gained 0.3% (1.7% y/y) after a 0.1% uptick. Light truck prices gained 0.2% (3.8% y/y) but passenger car prices improved 0.6% (1.8% y/y) following a 0.2% decline. Furniture prices improved 0.2% (1.6% y/y) following two months of decline. Private capital equipment costs increased 0.2% (1.4% y/y), the strongest gain since February.

Final demand services costs (63% of the total index) increased 0.4% (0.6% y/y), the largest increase in nine months. Transportation of passengers prices improved 0.9% (-3.6% y/y), adding to June's 0.5% rise. Trade services costs rose 0.4% (0.1% y/y), the third consecutive monthly gain.

Final demand construction prices (2.0% of the index) jumped 0.5% (2.0% y/y), the strongest gain in nine months.

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.

Producer Price Index (SA, %) Jul Jun May Jul Y/Y 2014 2013 2012
Final Demand 0.2 0.4 0.5 -0.8 1.6 1.3 1.9
  Excluding Food & Energy 0.3 0.3 0.1 0.6 1.7 1.5 1.9
     Goods -0.1 0.7 1.3 -3.7 1.3 0.8 1.7
       Foods -0.1 0.6 0.8 -2.8 3.2 1.7 3.0
       Energy -0.6 2.4 5.9 -17.6 -1.0 -0.8 0.2
     Goods Excluding Food & Energy 0.0 0.4 0.2 0.5 1.5 1.1 1.8
   Services 0.4 0.3 0.0 0.6 1.8 1.6 1.9
   Construction 0.5 0.1 0.1 2.0 3.0 1.8 2.9
Intermediate Demand - Processed Goods -0.2 0.7 1.0 -6.6 0.6 0.0 0.5
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