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Economy in Brief

U.S. Producer Prices Rise Marginally; Core Prices Improve
by Tom Moeller  June 11, 2019

The Producer Price Index for final demand rose 0.1% during May (1.8% y/y) following a 0.2% April increase. A 0.2% rise had been expected in the Action Economics Forecast Survey. Producer prices excluding food & energy increased an expected 0.2% last month (2.3% y/y) after a 0.1% uptick. The PPI excluding food, beverages and trade services, another measure of underlying price inflation, strengthened 0.4% (2.3% y/y) during May for the second straight month.

Lower energy prices held back the increase in the PPI following, three straight months of increase. They declined 1.0% (-3.0% y/y) reflecting a 1.7% easing (-5.8% y/y) in gasoline prices. Home heating oil prices slipped 0.2% (-0.8% y/y) and the cost of electric power fell marginally (+1.1% y/y). Accompanying this weakness was a 0.2% fall (+2.2% y/y) in the cost of natural gas, down for the fourth month in the last five.

A 0.3% fall (+0.4% y/y) in food prices accompanied the weakening in energy prices. It was the fourth monthly shortfall this year. Egg prices dropped roughly one-quarter and they were down by 41.1% y/y. Fresh fruit & melon prices also were weak and fell 6.8% m/m (-15.9% y/y). Offsetting these declines was a 3.6% rise (9.6% y/y) in fresh & dried vegetable costs. Beef & veal prices were little changed m/m (-1.2% y/y) while dairy product costs prices rose 0.5% (3.4% y/y).

Prices for core goods for final demand held steady (1.6% y/y) for a  second straight month, with core finished consumer goods prices edging 0.1% higher (2.4% y/y). Core nondurable consumer goods costs rose 0.1% (3.0% y/y) and durable consumer goods prices edged down 0.2% (1.6% y/y). Appliance prices rose 0.6% (4.4% y/y) but passenger car prices eased 0.1% (+0.9% y/y). Private capital equipment costs improved 0.1% (2.4% y/y).

Services prices increased 0.3% (2.4% y/y), though trade services prices declined 0.5% (+2.1% y/y) for a second straight month. The cost of trade of finished goods declined 0.5% (+1.8% y/y). Passenger transportation fees gained 1.8% (4.5% y/y) and transportation & warehousing costs rose 0.4% (3.5% y/y). Services prices less trade, transportation & warehousing gained 0.5% (2.4% y/y).

Construction costs held steady (5.3% y/y). Private building costs eased 0.2% (5.2% y/y) but government costs rose 0.3% (5.6% y/y).

Prices for intermediate demand eased 0.2% (-0.6% y/y) after a 0.1% slip.

The PPI data can be found in Haver's USECON database. Further detail can be found in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

 Crop Prices and Flooding: Will 2019 Be a Repeat of 1993? from the Federal Reserve Bank of St. Louis can be found here.

Producer Price Index (SA, %) May Apr Mar May Y/Y 2018 2017 2016
Final Demand 0.1 0.2 0.6  1.8 2.9 2.3 0.4
   Excluding Food & Energy 0.2 0.1 0.3 2.3 2.6 1.9 1.2
   Excluding Food, Energy & Trade Services 0.4 0.4 0.0 2.3 2.8 2.1 1.2
   Goods -0.2 0.3 1.0 0.6 3.4 3.3 -1.4
      Foods -0.3 -0.2 0.3 0.4 0.2 1.2 -2.8
      Energy -1.0 1.8 5.6 -3.0 10.2 10.4 -8.4
    Goods Excluding Food & Energy 0.0 0.0 0.2 1.6 2.5 2.2 0.7
   Services 0.3 0.1 0.3 2.4 2.6 1.8 1.4
      Trade Services -0.5 -0.5 1.1 2.1 1.8 1.4 1.3
   Construction 0.0 1.6 0.2 5.3 4.0 2.2 1.1
Intermediate Demand - Processed Goods -0.2 -0.1 0.8 -0.6 5.3 4.7 -3.1
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