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Economy in Brief

U.S. Producer Prices Dip in August; Core Prices Move Higher
by Tom Moeller  September 14, 2022

• Energy prices decline again; food prices hold steady.

• Price increases of core goods remain moderate.

• Services prices strengthen.

The Producer Price Index for Final Demand eased 0.1% during August following a 0.4% July decline, revised from -0.5%. The 1.0% June increase was unrevised. During the last 12 months, the PPI increase has moderated to 8.7% from an 11.7% March peak. An unchanged August PPI had been expected in the Action Economics Forecast Survey.

The Producer Price Index less food, energy & trade services increased 0.2% (5.6% y/y) in August after a downwardly revised 0.1% July gain and a 0.3% June increase. The PPI excluding just food & energy rose 0.4% last month. A 0.3% August increase had been expected.

The decline in the August PPI was led by a 6.0% drop (+5.9% y/y) in energy prices, following a 9.0% drop in July. Gasoline prices weakened 12.7% (+25.5% y/y) after a 17.4% July drop. Home heating oil prices weakened 12.2% (+59.2% y/y) following an 11.3% July shortfall. Natural gas costs rose 0.9% (25.0% y/y) after falling 2.6% in July while electric power costs jumped 1.0% last month (12.2% y/y) following a 0.9% increase.

Food prices held steady (13.1% y/y) in August after rising 1.3% in July. Beef & veal prices eased 0.4% (-12.6% y/y) after surging 9.5% in July. Dairy product prices weakened 1.7% (+20.3% y/y) after falling 0.4% in July. Fresh & dried vegetable prices have risen 45.2% y/y while egg prices strengthened 104.7% y/y.

The PPI for goods less food & energy rose 0.2% (8.1% y/y) in August, the same as in July. These increases are the slowest since late in 2020. Finished consumer goods prices less food & energy increased 0.5% (8.4% y/y) following a 0.6% July rise. Durable consumer goods prices gained 0.3% (7.7% y/y) and core nondurable consumer goods prices rose 0.6% (8.9% y/y). Prices for private capital equipment strengthened 0.5% in August (9.3% y/y) for a second consecutive month.

Services prices increased 0.4% (6.6% y/y) in August after a 0.2% July gain. Trade services prices jumped 0.8% (12.9% y/y) after rising 0.9% in July. Services prices less trade, transportation & warehousing moved up 0.3% (2.3% y/y) after holding steady in July.

Construction product prices rose 0.3% in August (22.9% y/y) after surging 5.0% in July. Construction product prices for private capital investment rose 0.3% (25.2% y/y) and government construction costs gained 0.2% (18.6% y/y).

Intermediate goods prices declined 1.7% (+14.1% y/y) in August following a 2.2% July drop. Processed fuel costs fell 5.2% (+32.3% y//y) and added to their 8.6% July weakening.

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.

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