Global| Jun 16 2010U.S. PPI Declines For Second Month With Lower Food & Energy Prices
by:Tom Moeller
|in:Economy in Brief
Summary
Pricing pressures continued to ease last month. Thanks to lower food & energy prices, the May producer price index fell 0.3% (+5.1% y/y) after a 0.1% April slip. Consensus expectations had been for a 0.5% decline. Nevertheless, the [...]
Pricing pressures continued
to ease last month. Thanks to lower food & energy prices, the
May producer price index fell 0.3% (+5.1% y/y) after a 0.1% April slip.
Consensus expectations had been for a 0.5% decline. Nevertheless, the
y/y gain in prices of 5.1% remained the highest since October 2008.
Finished energy prices fell 1.5% (+16.7% y/y) after a 0.8% April decline. Not seasonally adjusted gasoline prices slipped in May (+31.2% y/y) and home heating oil prices reversed most of their April increase (+44.8% y/y). Finally, natural gas prices fell for the third straight month (+0.7% y/y) but electricity prices rose (2.0% y/y).
Finished food prices slipped for the second consecutive month (+5.7% y/y) led by lower vegetable (+38.1% y/y) and egg prices (+3.8% y/y). These declines were countered by higher beef prices (14.5% y/y) which were strong for the fourth straight month.
The second consecutive 0.2% increase in finished producer prices less food & energy prices beat Consensus expectations for a 0.1% uptick. Still, the 1.3% y/y increase remained the weakest since October 2006. Finished consumer goods prices less food & energy rose 0.3%, still leaving the 1.9% y/y increase nearly half the annual gains during the last two years. Finished durables prices rose 0.3% (0.6% y/y) while core finished consumer nondurable goods prices rose an increased 0.4% (2.8% y/y). Capital equipment price inflation remained tame (0.6% y/y) versus annual gains between 1.0% and 3.0% back to 2004.
Intermediate goods prices continued firm with a 0.4% gain (8.4% y/y). Core prices rose a diminished 0.3% but the 6.1% y/y gain was the strongest since October 2008. The strength continued to reflect increases in the price of steel (32.4% y/y) & aluminum (16.1% y/y).
Price pressures eased last month at the earliest stage of processing. Crude materials prices fell 2.8% along with a 1.6% decline in core prices. The decline was led by lower scrap copper prices and lower iron & steel scrap prices, but they have doubled y/y.
The producer price data is available in Haver's USECON database. More detailed data is in the PPI and in the PPIR databases.
| Producer Price Index(%) | May | April | March | May y/y | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| Finished Goods | -0.3 | -0.1 | 0.7 | 5.1 | -2.5 | 6.4 | 3.9 |
| Less Food & Energy | 0.2 | 0.2 | 0.1 | 1.3 | 2.6 | 3.4 | 2.0 |
| Intermediate Goods | 0.4 | 0.8 | 0.6 | 8.4 | -8.4 | 10.3 | 4.0 |
| Less Food & Energy | 0.3 | 1.1 | 0.7 | 6.1 | -4.2 | 7.4 | 2.8 |
| Crude Goods | -2.8 | -1.2 | 3.2 | 21.5 | -30.3 | 21.4 | 11.9 |
| Less Food & Energy | -1.6 | 4.0 | 6.0 | 41.2 | -23.5 | 14.8 | 15.6 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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