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Economy in Brief

U.S. Producer Prices Rise Minimally; Energy Prices Decline
by Tom Moeller  July 12, 2019

The Producer Price Index for final demand rose 0.1% during June (1.7% y/y) for the second straight month. The rise matched expectations in the Action Economics Forecast Survey. Producer prices excluding food & energy increased 0.3% last month (2.3% y/y), the strongest gain in three months. The PPI excluding food, beverages and trade services, another measure of underlying price inflation, held steady (2.1% y/y) during June following two months of 0.4% gain.

Lower energy prices continued to hold back the increase in the PPI. They declined 3.1% (-7.1% y/y) reflecting a 5.0% fall (-12.1% y/y) in gasoline prices which followed a 1.7% decline. Home heating oil prices also were off 5.0% (-9.3% y/y). The cost of natural gas eased 0.9% (+2.4% y/y), down for the fifth month in the last six. Offsetting these declines was a 0.4% rise (+0.7% y/y) in the cost of electric power.

Higher food prices offset some of this weakness by rising 0.6% (2.2% y/y) following two months of decline. Egg prices surged by one-quarter (-23.8% y/y) and reversed the May weakening. Fresh fruit & melon prices strengthened 13.7% m/m (-6.0% y/y). Fresh & dried vegetable costs increased 4.1% and rose by one quarter y/y. Offsetting these increases, beef & veal prices fell 4.4% m/m (-2.6% y/y) while dairy product costs held steady (3.6% y/y).

Prices for core goods for final demand held steady (1.4% y/y) for a third straight month. Core finished consumer goods prices also were unchanged (2.4% y/y) after a 0.1% rise. Core nondurable consumer goods costs held steady (3.0% y/y) and durable consumer goods prices improved 0.1% (1.4% y/y). Appliance prices eased 0.1% (+4.2% y/y) but passenger car prices were unchanged (0.7% y/y). Private capital equipment costs improved 0.1% (2.3% y/y) for a second straight month. Government goods prices less food & energy rose 0.1% (2.0% y/y) for a second month.

Services prices increased 0.4% (2.5% y/y). Trade services prices rebounded 1.3% (2.8% y/y) after two straight 0.5% declines. The cost of trade of finished goods surged 1.4% (2.7% y/y) following two months of decline. Passenger transportation fees fell 0.7% (+4.3% y/y) and transportation & warehousing costs rose 0.6% (2.9% y/y). Services prices less trade, transportation & warehousing held steady (2.2 % y/y).

Construction costs improved 0.2% (5.3% y/y). Private building costs edged 0.1% higher (5.0% y/y) but government costs rose 0.4% (5.9% y/y).

Prices for intermediate demand declined 1.1% (-0.6% y/y), down for the third straight month.

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.

Producer Price Index (SA, %) Jun May Apr Jun Y/Y 2018 2017 2016
Final Demand 0.1 0.1 0.2 1.7 2.9 2.3 0.4
   Excluding Food & Energy 0.3 0.2 0.1 2.3 2.6 1.9 1.2
   Excluding Food, Energy & Trade Services 0.0 0.4 0.4 2.1 2.8 2.1 1.2
   Goods -0.4 -0.2 0.3 0.0 3.4 3.3 -1.4
      Foods 0.6 -0.3 -0.2 2.2 0.2 1.2 -2.8
      Energy -3.1 -1.0 1.8 -7.1 10.2 10.4 -8.4
    Goods Excluding Food & Energy 0.0 0.0 0.0 1.4 2.5 2.2 0.7
   Services 0.4 0.3 0.1 2.5 2.6 1.8 1.4
      Trade Services 1.3 -0.5 -0.5 2.8 1.8 1.4 1.3
   Construction 0.2 0.0 1.6 5.3 4.0 2.2 1.1
Intermediate Demand - Processed Goods -1.1 -0.2 -0.1 -0.6 5.3 4.7 -3.1
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