Global| Jan 18 2012U.S. PPI Slips M/M With Lower Food & Energy Costs; Full Year Gain Accelerates
by:Tom Moeller
|in:Economy in Brief
Summary
Overall inflation may be tame but trouble was brewing last year. The December producer price index for finished goods slipped 0.1% during December following an unrevised 0.3% November gain. The figure compared to Consensus [...]
Overall inflation may be tame but trouble was brewing last year. The
December producer price index for finished goods slipped 0.1%
during December following an unrevised 0.3% November gain. The figure
compared to Consensus expectations for a 0.1% uptick, according to the
Action Economics survey. For all of last year, however, wholesale prices
rose a firmer 6.0% after a 4.2% gain in 2010. Core pricing power picked up
last month as the PPI less food & energy rose 0.3%, its strongest gain
since July. A 0.1% rise had been expected. For 2011, the full-year gain of
2.4% was double 2010.
A 0.8% decline (+7.7% y/y) in food prices accounted for much of the slip in last month's PPI. However, the 6.3% full-year gain was the strongest since 2008. Prices for fresh & dried vegetables fell sharply last month and reversed the November increase. However, for the full year they rose 9.3%. Beef & veal prices rose sharply m/m and by 15.1% for the full year. Dairy prices also posted a strong 12.5% gain for all of the year after a 10.8% gain in 2010. Energy prices also fell 0.8% last month but posted a strong 15.7% full year gain. Gasoline prices fell 3.6% m/m but were up by one-third for the year. Home heating oil costs also fell 4.5% m/m but also were up by one-third for the year. These strong full-year increases were accompanied by a modest 2.7% rise in electric power costs and a 1.4% decline in prices for natural gas.
Finished consumer goods prices fell 0.2% (+5.1% y/y). Less food & energy, consumer goods prices rose 0.3% (3.1% y/y) and by 2.4% for the full year. Within the components, men's apparel prices rose 5.0% for the full year after being little-changed in 2010. Household furniture prices rose 2.2% y/y, up from 0.2% in 2010. Appliance prices rose 1.1% y/y after a 0.6% fall in 2010 and women's apparel prices rose 1.3% for the year after a 0.4% dip. Passenger car prices inched up 0.6% y/y after 2010's 1.4% decline and tobacco prices rose a stable and strong 6.0% for the year. Capital equipment prices rose 0.2% last month and the 1.5% annual increase built on a 0.4% rise in 2010.
Intermediate goods prices fell 0.5% m/m but were up 9.1% for the year as energy prices slipped 0.3% last month (17.7% y/y) and food prices fell 0.6% (12.0% y/y). Core-intermediate prices fell 0.5% (+6.3% y/y). Crude materials prices fell 1.1% last month, but gained 7.5% for the year, as energy prices slipped 0.1%, though up 10.9% for the year. Food prices fell 2.6% (23.6% y/y). Prices less food & energy were unchanged m/m but up 18.8% for the full year.
The PPI data are contained in Haver's USECON database with further detail in PPI and PPIR. The expectation figure is available in the AS1REPNA database.
| Producer Price Index (%) | Dec | Nov | Oct | Dec Y/Y | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|---|
| Finished Goods | -0.1 | 0.3 | -0.3 | 4.4 | 6.0 | 4.2 | -2.5 |
| Less Food & Energy | 0.3 | 0.1 | 0.0 | 3.1 | 2.4 | 1.2 | 2.5 |
| Food | -0.8 | 1.0 | 0.1 | 6.1 | 6.3 | 3.9 | -1.4 |
| Energy | -0.8 | 0.1 | -1.4 | 6.5 | 15.7 | 13.8 | -17.7 |
| Intermediate Goods | -0.5 | 0.2 | -1.1 | 5.8 | 9.1 | 6.4 | -8.4 |
| Less Food & Energy | -0.5 | -0.4 | -0.6 | 4.2 | 6.3 | 4.3 | -4.2 |
| Crude Materials | -1.1 | 3.8 | -2.5 | 11.1 | 17.5 | 21.5 | -30.3 |
| Less Food & Energy | 0.0 | -2.5 | -4.3 | 3.3 | 18.8 | 32.6 | -23.4 |
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.
