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Economy in Brief

U.S. Producer Price Index & Core Prices Edge Higher
by Tom Moeller  January 15, 2020

The Producer Price Index for final demand rose 0.1% during December (1.3% y/y) after having been unchanged in November. A 0.2% gain had been expected in the Action Economics Forecast Survey. Producer prices excluding food & energy also rose 0.1% (1.1% y/y) following a 0.2% decline. A 0.2% rise had been expected. The PPI excluding food, beverages and trade services, another measure of underlying price inflation, edged 0.1% higher (1.5% y/y) after holding steady in November.

Food prices worked 0.2% lower (+0.9% y/y) following two months of strong gains. Beef & veal prices slid 7.0% (-2.2% y/y), but dairy product prices improved 0.6% (8.0% y/y). Fruit & melon prices also were strong with an 11.0% jump (-4.5% y/y) while bakery product prices rose 0.4% (1.1% y/y).

Final demand energy prices rose 1.5% (3.3% y/y) as gasoline prices increased 3.7% (14.7% y/y) and home heating oil costs strengthened 7.7% (-2.8% y/y). Electric power costs rose 0.5% (2.0% y/y). Offsetting these increases was a 0.4% decline (-1.6% y/y) in the cost of natural gas.

Finished consumer goods prices less food & energy rose 0.1% (1.6% y/y). Core nondurable goods prices held steady (1.8% y/y) and durable product prices improved a minimal 0.1% (1.1% y/y) for a second straight month. Private capital equipment prices rose 0.1% (1.5% y/y), also for a second consecutive month.

Services prices for final demand were unchanged (1.3% y/y) following November's 0.3% decline. Trade services prices fell 0.3% (+0.4% y/y), off for the second consecutive month, as the cost of finished goods trade declined 0.5%. Transportation & warehousing prices jumped 2.7% (2.6% y/y) but excluding these costs, prices declined 0.1% (+1.6% y/y).

The cost of construction held steady (3.6% y/y) for the second straight month. Private construction prices edged 0.1% higher (3.6% y/y) but public construction costs were flat (3.8% y/y).

Intermediate product prices rose 0.1% (-1.7% y/y) as materials & component prices for manufacturing were off 0.3% (-3.0% y/y).

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, %) Dec Nov Oct Dec Y/Y 2019 2018 2017
Final Demand 0.1 0.0 0.4 1.3 1.7 2.9 2.3
   Excluding Food & Energy 0.1 -0.2 0.3 1.1 2.1 2.6 1.9
   Excluding Food, Energy & Trade Services 0.1 0.0 0.1 1.5 2.0 2.8 2.1
   Goods 0.3 0.3 0.7 1.1 0.2 3.4 3.3
      Foods -0.2 1.1 1.3 0.9 1.8 0.2 1.2
      Energy 1.5 0.6 2.8 3.3 -4.4 10.2 10.4
    Goods Excluding Food & Energy 0.1 0.1 0.0 0.6 1.4 2.5 2.2
   Services 0.0 -0.3 0.3 1.3 2.2 2.6 1.8
      Trade Services -0.3 -0.6 0.8 0.4 2.4 1.8 1.4
   Construction 0.0 0.0 0.4 3.6 4.9 4.1 2.2
Intermediate Demand - Processed Goods 0.1 0.2 0.4 -1.7 -1.4 5.4 4.7
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