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Economy in Brief

U.S. Producer Prices Surge With Higher Energy Costs
by Tom Moeller  April 11, 2019

The headline Final Demand Producer Price Index increased 0.6% during March (2.2% y/y) following a 0.1% February gain. A 0.3% rise had been expected in the Action Economics Forecast Survey. Producer prices excluding food & energy rose 0.3% (2.4% y/y) after a 0.1% uptick. A 0.2% rise had been anticipated. The PPI excluding food, beverages and trade services, another measure of underlying price inflation, was unchanged (2.0% y/y) following a 0.1% rise.

Higher energy prices strengthened the PPI for the second straight month, rising 5.6% (-0.4% y/y). It reflected a 16.0% surge in the cost of gasoline, which remained down 4.3% y/y. Home heating oil prices increased 4.8% (2.5% y/y). Natural gas prices increased 1.4% (0.7% y/y) and the cost of electric power rose 0.6% (0.8% y/y).

A 0.3% rebound in food prices (0.1% y/y) added to the rise in energy prices. It followed two straight months of decline. Vegetable prices rose 17.6% (18.1% y/y). Dairy product prices increased 1.0% (3.5% y/y), a gain that was accompanied by stable (0.7% y/y) beef & veal prices. Egg prices fell 8.8% and were down by roughly one-half y/y. Fresh fruit prices eased 0.8% both m/m and y/y.

Core goods prices rose 0.2% (2.0% y/y) reflecting a 0.2% gain (2.7% y/y) in finished consumer goods prices. Nondurable consumer goods costs rose 0.5% (3.4% y/y) but durable consumer goods prices eased 0.2% (+1.7% y/y). Appliance prices slipped 0.2% (+5.2% y/y) and light truck prices fell 0.7% (+0.2% y/y). Private capital equipment prices rose 0.1% (2.5% y/y).

Services prices increased 0.3% (2.5% y/y) as trade services prices surged 1.1% (3.9% y/y). The cost of trade of finished goods gained 1.2% (+3.6% y/y). Passenger transportation fees declined 1.5% (+0.4% y/y) and transportation & warehousing costs fell 0.5% (+4.3% y/y). Service prices less trade, transportation & warehousing held steady (1.8% y/y).

Construction costs strengthened 0.2% (4.9% y/y), both private & government.

Prices for intermediate demand strengthened 0.8% (1.3% y/y) after a 0.4% rise. These gains followed three straight months of decline.

The PPI data using both the current and old methodology are contained in Haver's USECON database. Further detail can be found in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

The minutes to the latest FOMC meeting can be found here.

Producer Price Index (SA, %) Mar Feb Jan Mar Y/Y 2018 2017 2016
Final Demand 0.6 0.1 -0.1 2.2 2.9 2.3 0.4
   Excluding Food & Energy 0.3 0.1 0.3 2.4 2.6 1.9 1.2
   Excluding Food, Energy & Trade Services 0.0 0.1 0.2 2.0 2.8 2.1 1.2
   Goods 1.0 0.4 -0.8 1.3 3.4 3.3 -1.4
      Foods 0.3 -0.3 -1.7 0.1 0.2 1.2 -2.8
      Energy 5.6 1.8 -3.8 -0.4 10.2 10.4 -8.4
    Goods Excluding Food & Energy 0.2 0.1 0.3 2.0 2.5 2.2 0.7
   Services 0.3 0.0 0.3 2.5 2.6 1.8 1.4
      Trade Services 1.1 -0.4 0.8 3.9 1.8 1.4 1.3
   Construction 0.2 -0.1 0.6 4.9 4.0 2.2 1.1
Intermediate Demand - Processed Goods 0.8 0.4 -1.4 1.3 5.3 4.7 -3.1
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