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Economy in Brief

U.S. Producer Price Inflation Moderates in August
by Tom Moeller  September 10, 2021

• Overall y/y increase sets record for series.

• Core goods & services price inflation slows m/m.

• Energy price gain moderates but food prices surge.

The Producer Price Index for Final Demand strengthened 0.7% (8.3% y/y) in August following two consecutive 1.0% increases. The year-to-year increase is the largest in the series history, dating back to 2009. A 0.5% rise for last month had been expected by the Action Economics Forecast Survey. The PPI excluding food and energy prices rose 0.6% (6.7% y/y) in August, also following two straight 1.0% gains. A 0.5% increase had been expected. The PPI less prices of food, energy and trade services rose 0.3% (6.3% y/y) following a 0.9% gain.

Prices for final demand goods increased 1.0% (12.6% y/y) in August after rising 0.6% in July. Final demand goods less foods and energy rose 0.6% (7.9% y/y) in August after rising 1.0% in each of the prior four months. Core finished consumer goods prices rose 0.5% (4.7% y/y) after a 0.9% rise. Durable consumer goods prices improved 0.7% (6.0% y/y) for a second straight month. The cost of core nondurable goods rose 0.4% (3.8% y/y) after surging 0.9%. Capital equipment prices gained 0.5% (4.6% y/y) following three straight months of 0.8% increase.

Energy prices for final demand rose 0.4% last month (32.3% y/y) following a 2.6% July rise. Gasoline prices eased 0.2% (+75.1% y/y) after surging 6.2% in July. The cost of home heating oil fell 4.2% (+69.3% y/y) after three straight months of strong increase. Finished food prices rebounded 2.9% last month (12.7% y/y) and reversed July's 2.1% decline. The cost of beef & veal surged 14.7% (59.2% y/y) following an 11.6% decline. Fresh fruit & melon prices eased 0.4% (-1.4% y/y) but vegetables prices jumped 16.0% (-4.9% y/y). Dairy products costs eased 1.4% (-0.4% y/y).

Final services rose 0.7% (6.4% y/y) after surging 1.1% in July. Trade services prices jumped 1.5% (8.3% y/y), the fourth strong increase in five mdonths. Prices for final demand transportation and warehousing services rose 2.8% (15.8% y/y), about as they did in July. Prices for services less trade, transportation and warehousing edged 0.1% higher (4.6% y/y) after a 0.6% rise.

Construction costs increased 0.2% (5.0% y/y) in August after surging 1.5% in July.

Intermediate goods prices jumped 1.0% (23.0% y/y) last month after a 1.7% July strengthening.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver's USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

Producer Price Index (SA, %) Aug Jul Jun Aug Y/Y 2020 2019 2018
Final Demand 0.7 1.0 1.0 8.3 0.2 1.7 2.9
   Excluding Food & Energy 0.6 1.0 1.0 6.7 0.9 2.1 2.6
   Excluding Food, Energy & Trade Services 0.3 0.9 0.5 6.3 0.7 2.0 2.8
   Goods 1.0 0.6 1.2 12.6 -1.4 0.4 3.4
      Foods 2.9 -2.1 0.8 12.7 1.3 1.9 0.2
      Energy 0.4 2.6 2.1 32.3 -12.8 -4.6 10.2
    Goods Excluding Food & Energy 0.6 1.0 1.0 7.9 0.7 1.4 2.5
   Services 0.7 1.1 0.8 6.4 0.9 2.3 2.6
      Trade Services 1.5 1.7 2.1 8.3 1.7 2.4 1.8
   Construction 0.2 1.5 0.7 5.0 2.3 5.0 4.1
Intermediate Demand - Processed Goods 1.0 1.7 1.9 23.0 -2.8 -1.4 5.3
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